Q3 2024 Real Estate Market Cycle Insights

Hi there, I’m excited to share the latest insights from Glenn Mueller’s Real Estate Market Cycle Monitor for the third quarter of 2024. This report dives deep into the state of five major property types across 54 metropolitan statistical areas (MSAs) in the U.S., revealing how shifts in GDP, employment, and interest rates are impacting the real estate landscape. Core Insights: National Property Type Cycle Locations Mueller’s analysis shows where different property types (Office, Industrial, Apartment, Retail, and Hotel) currently stand in their respective cycles. Office Market Occupancy: Decreased by 0.2% this quarter and 0.6% year-over-year. Trends: Despite new completions, demand growth has slowed, and remote work is still impacting long-term occupancy. Industrial Market Occupancy: Down 0.3% this quarter and 1.4% year-over-year. Growth: New leasing is picking up, driven by companies like Amazon, but increased supply has led to a cyclical shift. Apartment Market Occupancy: Declined 0.1% in Q3, down 0.4% year-over-year. Supply: Expected to hit a 20-year high, with over 500,000 new units in 2024, particularly affecting the South and West markets. Retail Market Occupancy: Remained flat and close to historical peak levels. Trends: Strong retail sales and limited new supply have contributed to sustained demand, especially in retail strip centers. Hotel Market Occupancy: Down 0.2% in Q3, showing bifurcated demand with luxury and conference hotels performing better than economy-class hotels. RevPAR: Increased 0.4% for the quarter and 1.4% year-over-year. Chart: National Property Type Cycle Locations Apartment Market Cycle Analysis The apartment sector is facing unique challenges and opportunities as it navigates increasing supply and fluctuating demand. With over 500,000 new units expected by year-end, occupancy and rent trends vary widely by region. Mueller’s insights highlight current cycle positions and key influences in the apartment market. Chart: Apartment Market Cycle Analysis Credit: This information is sourced from the Real Estate Market Cycle Monitor – Third Quarter 2024 by Glenn Mueller, Professor Emeritus at Denver University and Director of Sharing Connexion.