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NAR's April 2023 Commercial Market Insights

The first quarter of the year was anything but boring for commercial real estate. The recent developments in the banking sector added concerns about lending activity in the market. While commercial real estate relies heavily on the banking industry for capital, there were rising concerns that the recent bank failures would make it harder to get a commercial real estate loan. Nevertheless, according to the Federal Reserve, commercial real estate loans of small, domestically commercial banks remained unchanged during February and March despite the bank failures. Meanwhile, in April, lending activity is picking up week by week.

In addition, most commercial real estate sectors continue to experience slower rent price gains and higher vacancy rates compared to the previous year. While the office sector is still struggling to recover from the pandemic, vacancy rates have reached new record highs. With multifamily construction overperforming in the last couple of years, apartment rent growth slowed down further from the record highs during the pandemic. But, although leasing activity is slower, the retail sector was able to keep vacancy rates near 4%. And rent prices for industrial spaces grew more than 10%, significantly faster than pre-pandemic.

Read the full report to see how each commercial real estate sector performed in the first quarter of 2023.



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