Industrial Real Estate Maintained Strength Through 2022, While Office Faltered in Q4
The industrial and office sectors had very different stories in the fourth quarter of 2022 as well as throughout the year, according to two new reports from CBRE. Industrial real estate’s performance in Q4 was a continuation of its 2022 track record, while office demand turned negative in the final three months of the year.
Net absorption for industrial increased by 2% quarter-over-quarter to 111.4 million square feet, despite the highest quarterly total of new completions on record. Annual net absorption of 506.3 million square feet was the second greatest ever, 27% lower than 2021’s record total.
Conversely, U.S. office market fundamentals weakened in Q4 2022, CBRE said. After four consecutive quarters of positive demand, the market recorded 5.9 million square feet of negative net absorption. With occupiers returning more space to the market, the overall vacancy rate increased by 30 basis points to 17.3%.