The commercial real estate market is slowly getting back on track, although the rise of Delta variant cases is casting a shadow on the path of the recovery. The multifamily, industrial, and retail property markets will continue to recover more quickly than the office property market, where vacancy rates will likely remain elevated in 2021-2022, compared to the pre-pandemic level.
Duluth Market
Overall economic conditions are stronger than nationally:
- Job creation is stronger than nationally
- Unemployment rate is lower than nationally, at a 4.3% change year-over-year; nationally it’s 5.9%
- Wages are rising faster than nationally, at a 9.6% change year-over-year; nationally it’s 4.3%
- Population growth is slower than nationally
The apartment property market is stronger than nationally:
- Lower vacancy rate (1.9%) than nationally (4.2%)
- Rents are rising more slowly than nationally
- Rent to income ratio is higher than nationally
- Construction activity is more robust than nationally
- Building permits are rising faster than nationally
The office property market is about the same than nationally:
- Lower vacancy rate (4.3%) than nationally (6.1%)
- Rent growth is slower than nationally
- Leasing volume is rising faster than nationally
- Stronger office job creation than nationally
- Construction activity is slower than nationally
- Sales transactions are not rising as fast than nationally
- Prices are not rising as fast than nationally
The industrial property market is stronger than nationally:
- Lower vacancy rate (1.6%) than nationally (4.2%)
- Rent growth is slower than nationally
- Leasing volume is not rising as fast than nationally
- Construction activity is slower than nationally
- Sales transactions are not rising as fast than nationally
- Prices are not rising as fast than nationally
The retail property market is weaker than nationally:
- Lower vacancy rate (1.4%) than nationally (4.3%)
- Rent growth is slower than nationally
- Leasing volume is not rising as fast than nationally
- Stronger retail trade job creation than nationally
- Construction activity is slower than nationally
- Sales transactions are not rising as fast than nationally
- Prices are not rising as fast than nationally
The hotel/lodging property market is stronger than nationally:
- Job creation in the leisure industry is weaker than nationally
- Larger share of leisure jobs than nationally