Commercial Real Estate - United States

The Commercial Real Estate market market in the United States is anticipated to reach a staggering US$25.28tn by the year 2024.
This projection indicates a significant annual growth rate (CAGR 2024-2029) of 2.18%, leading to a market volume of US$28.16tn by 2029.
It is worth noting that, in comparison to other countries worldwide, the United States is expected to generate the highest value in the Real Estate sector, with an estimated worth of US$25.28tn by 2024.
The United States commercial real estate market is experiencing a surge in demand for flexible office spaces due to the rise of remote work and the need for adaptability.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in United States has been experiencing significant developments and trends in recent years.

Customer preferences: Customers in the Commercial Real Estate market in United States have shown a strong preference for properties that offer flexible and adaptable spaces. This is driven by the changing nature of businesses and the need for spaces that can accommodate evolving needs. Additionally, customers are increasingly looking for properties that are located in prime locations with easy access to transportation and amenities. This is driven by the desire to attract and retain top talent, as well as to cater to the needs of an increasingly mobile workforce.

Trends in the market: One of the key trends in the Commercial Real Estate market in United States is the rise of co-working spaces. This trend has been fueled by the growth of startups and freelancers who are looking for affordable and flexible office spaces. Co-working spaces offer a range of amenities and services, such as shared meeting rooms, high-speed internet, and networking events, which are attractive to these customers. Another trend in the market is the increasing demand for mixed-use developments. These developments combine commercial, residential, and retail spaces in a single location, creating vibrant and dynamic communities.

Local special circumstances: The Commercial Real Estate market in United States is influenced by local factors such as population growth and urbanization. As more people move to cities in search of job opportunities, the demand for commercial real estate in urban areas has increased. Additionally, the United States has a diverse economy with different industries driving demand for commercial real estate in different regions. For example, technology companies are driving demand for office space in cities like San Francisco and Seattle, while the healthcare industry is driving demand for medical office space in cities like New York and Boston.

Underlying macroeconomic factors: The development of the Commercial Real Estate market in United States is also influenced by underlying macroeconomic factors. For example, low interest rates have made it easier for businesses to access financing for real estate investments, leading to increased demand. Additionally, the strong economy and low unemployment rate have contributed to the growth of the market, as businesses expand and create new jobs. However, it is important to note that the market is also sensitive to changes in the macroeconomic environment, such as changes in interest rates or economic downturns, which can impact demand and pricing.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.