According to the National Association of REALTORS’ Commercial Markets Insight Report in January 2022, the Lee County commercial real estate market is seeing a healthy recovery in a post-pandemic economy. This is creating a favorable market for investors looking at the future of commercial The report states:
“The recovery in the commercial real estate market that started in the second half of 2021 is continuing into the first month of 2022. All core commercial sectors ― multifamily, office, industrial, and retail ― experienced net positive absorption during the last quarter of 2021 through January. As such, rents continue to rise and vacancy rates continue to trend downwards except in the office market.
In the multifamily market, the asking rents rose at an average year-over-year rate of 11.3% in the past 12 months as of January. Asking rents for industrial properties also continued to rise steeply at 8.9%. Asking rents for retail properties were also up over the past 12 months by 3.5% on average. In the office property market, asking rents are up on average by 1% year-over-year in the past 12 months, weighed down by declining rents in a few markets in major metro areas of New York, Washington DC, and San Francisco. However, office rents are rising in nearly all markets.”
In Fort Myer, specifically, multifamily property sales are currently the most lucrative real estate property investments with rising sales and asking rent prices. The 2021 Commercial Real Estate Metro Market Report published by the National Association of REALTORS provides a clear picture of the industry from Quarter 4 of 2021. The industry is seeing trends in the multifamily, industrial, office, and retail sectors. Key drivers of these trends include rising employment rate and return to in-person workplaces, strong migration to Florida and population growth, and inflation.
Multifamily Property Sales Are Skyrocketing
In 2021, multifamily real estate had a record-breaking year with all-time high demand, increasing asking rent prices, and sustainable supply metrics. While the market appears to be stable entering 2022, investors should remain cautious due to concerns about limited supply as demand continues to rise. However, the number of available inventory has been steadily rising since 2020.
Multifamily apartments in Lee County have higher vacancy rates than the national average at 7.1% year-over-year compared to 4.6%. In addition, the average asking rent price increased by 29.9% year-over-year compared to the national average at 11.3%. Finally, the absorption rate of multifamily apartments is 19.1% compared to the national average at 4.2%.
Industrial Property Inventory Hit a Record Low in 2021
Industrial property has also been in high demand in Lee County also hitting a record year in 2021 with vacancies hitting all-time lows. In fact, the sector saw almost 700 million square feet of space absorbed in 2020.
According to the National Association of REALTORS, “The sustained growth in e-commerce will continue to also fuel the demand for industrial space in Florida’s coastal metro markets, both in the East and West coastlines.”
Industrial property in Lee County hit lower vacancy rates than the national average at 2.1% year-over-year compared to 4.2%. In addition, the average asking rent price increased by 9.3% year-over-year compared to the national average at 8.6%. Finally, the absorption rate of industrial property is 5.4% compared to the national average at 3%.
Office Property Sales Seeing Strong Market Growth
The office sector has seen some fluctuations that are mostly credited to new construction and is expected to continue to see sustainable growth in the future. During the pandemic, there was concern that the sector would not recover in the post-pandemic economy, however, most of those concerns have now been discarded as most companies continue to return to work. In fact, most companies continue to see sustainable value in their office spaces and continue to make them a priority, even with work-from-home capabilities.
Office property in Lee County hit lower vacancy rates than the national average at 4.5% year-over-year compared to 12.2%. In addition, the average asking rent price increased by 4.2% year-over-year compared to the national average at 0.1%. Finally, the absorption rate of office property is 3.1% compared to the national average at -0.5%.
Retail Property Inventory Seeing Healthy Turnover in the Market
Retail property is expected to continue to see promising gains in 2022 as brick-and-mortar storefronts become more desirable. As restrictions begin to lift, consumers want to have physical locations to visit. This consumer behavior, coupled with an increase in single-tenant shops and small stores popping up in Lee County is driving healthy turnover in the market.
According to the National Association of REALTORS, “NAR researchers are optimistic about brick-and-mortar continuing to make gains as it solidifies its place in complementing online shopping fulfillment. Retail brick-and-mortar market growth is expected to be largely driven by smaller shops, such as neighborhood centers, strip centers, and single-tenant stores.”
Retail property in Lee County hit lower vacancy rates than the national average at 3.9% year-over-year compared to 4.6%. In addition, the average asking rent price increased by 3.5% year-over-year compared to the national average at 2.8%. Finally, the absorption rate of retail property is 1.9% compared to the national average at 0.7%.
The state of the economy has been questionable at best since the pandemic hit in 2020. However, the record-breaking sales and rising employment rates, and migration patterns in Lee County are indicating a promising future for the real estate industry and a range of businesses post-pandemic. While inventory is limited in some areas, new construction and promising absorption rates are expected to offset concerns in these sectors.
With the help of a skilled real estate professional, your investment outlook could be extremely promising in any one of these four commercial real estate sectors.