Everyone in CRE knows the triple-location formula. Even so, it’s easy to forget that five years after the onset of the Covid-19 pandemic, the commercial real estate landscape remains a patchwork of regional strengths and vulnerabilities, with property performance varying widely by sector and location. In short, local market realities often diverge sharply from the broader narrative, as Moody’s Q1 preliminary trend analysis shows.
For example, multifamily properties in ten primary metro areas—eight in the South Atlantic and two in the West—have seen cumulative rent growth exceeding 40%, driven by favorable demographics and measured inventory expansion. These metros, characterized by relative affordability and population influx, continued to post positive year-over-year rent growth in early 2025. Yet, this success comes with challenges: high levels of new construction in cities like Austin, Dallas, and Houston have pushed vacancy rates up to 11.6%, 8.9%, and 8.8%, respectively, underscoring the delicate balance between growth and oversupply.
The office sector tells a similarly nuanced story. While New York City led the nation with 1.9 million square feet of positive net absorption, smaller cities such as Pittsburgh and Charlotte also posted robust gains. However, these bright spots were not enough to offset a national trend of contraction, as the quarter saw 1.4 million square feet of net move-outs and vacancies rising from 16.8% pre-pandemic to 20.4%. The pain is particularly acute in downtown central business districts, where vacancy rates have climbed from 13.2% to 18.9% since the pandemic began.
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Retail real estate, long considered vulnerable, has experienced localized volatility. Some markets, like Colorado Springs, saw vacancy rates fall by 100 basis points, while others, such as Louisville, saw a spike of 140 basis points. Despite these swings, most primary metros—91%—recorded relatively stable vacancy shifts of less than 40 basis points. Seattle and Portland now boast the lowest retail vacancies at 5.5% and 5.9%, respectively, and 77 of the top 80 markets reported positive effective rent growth over the past year. Only Columbia, Lexington, and San Francisco saw rents decline.
Often cited as the pandemic’s big winners, industrial properties also display regional disparities. San Bernardino/Riverside led the nation in new completions for two consecutive quarters, adding 1.6 million square feet, followed by Indianapolis and Los Angeles. However, these gains have come with rising vacancies, particularly in Orange County, San Bernardino/Riverside, and San Jose, each experiencing increases of at least 200 basis points.
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