Market Comparison: 2020 vs 2021

navpoint  /   September 26, 2022

2021 was a great year for commercial Real Estate in the state of Colorado, as well as nationally. Denver saw an increase in market rents across all property types from 2020 to 2021; Office Rents, the property type hit the hardest during the pandemic increased by 0.58%. Industrial rental rates rose 5.30%, retail rose 2.49%, and multifamily rates saw a 12.78% increase. Nationally, Office market rents rose 0.36%, Industrial increased 7.96%, retail saw a 2.85% rise, and multifamily rates rose 10.90%.

Another excellent gauge of the current market conditions is comparing today’s pricing and volume to pre-pandemic 2019 levels. In January of 2019, the commercial property price index sat at 132.1, and at the end of 2021, closed at 145.7. This is an increase of 10.3% over a two-year period that included an index drop of nearly 12% in a matter of 4 months. Even though deal volume in quarter four of 2021 has not been officially announced, a telling picture is painted. Deal volume from 2019 to 2020 dropped from $405.4 billion to $280 billion. Through 3 quarters in 2021, deal volume already had tallied $494.3 billion.

In 2021, Real Estate investors purchased Industrial space and apartments in record fashion. Industrial vacancy decreased to 4.2% due to the boom in American spending on retail goods, mainly through e-commerce. Since the beginning of 2020, household spending on goods alone has risen by more than $480 billion. Multifamily vacancy rates are down to 4.9% (1.4% decrease from a year ago.) Last year, national absorption was 714,000 units, double the previous 5-year average. Demand outpaced supply significantly, with only 373,000 new units hitting the market in 2021. 10-year average occupancy sits at 93.84%, which we are beating by nearly 1.5%.

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