Commercial Property Prices Stabilizing, Says IRR Report

Nationwide, commercial property prices are stabilizing among significant economic shifts, according to Integra Realty Resources’ 2024 Mid-Year Commercial Real Estate Report. IRR is one of North America’s largest independent commercial real estate valuation and consulting firms.  

“While the commercial real estate market continues to face challenges, our 2024 Mid-Year Report demonstrates the industry’s remarkable adaptability,” IRR CEO Anthony M. Graziano said in a press release.  

“We are seeing a stabilization in property prices and a modest increase in values this year, marking a significant turning point,” Graziano continued. “Our analysis highlights key trends such as adaptive reuse in the industrial sector, resilience in multifamily markets, innovations in retail spaces and the evolving dynamics in the office sector as it adjusts to new work patterns. These insights are essential for stakeholders navigating the current landscape and planning strategically for the future.” 

CRE in Pennsylvania 

Findings from Pennsylvania’s commercial market cycles include: 

Industrial market cycle:  

• Pittsburgh: Expansion 
• Philadelphia: Hypersupply 

Expansion is defined by decreasing vacancy rates, modern/high new construction, high absorption, moderate/high employment growth and medium/high rental rate growth. Hypersupply includes increasing vacancy rates, moderate/high new construction, low/negative absorption, moderate/low employment growth and medium/low rental rate growth.  

Multifamily market cycle: 

• Pittsburgh: Hypersupply 
• Philadelphia: Hypersupply  

Office market cycle:  

• Pittsburgh: Recession 
• Philadelphia: Recession  

Recession is defined by increasing vacancy rates, moderate/low new construction, low absorption, low/negative employment growth and low/negative rental rate growth.  

Retail market cycle:  

• Pittsburgh: Recovery  
• Philadelphia: Recession 

Cities in recovery are characterized by decreasing vacancy rates, low new construction, moderate absorption, low/moderate employment growth and negative/low rental rate growth.  

CRE Nationwide  

Nationwide, IRR found that the office market in 2024 saw elevated vacancy rates and negative absorption continued across all regions, likely as an effect of remote work trends, business migration to tax-friendly states and changes in private sector employment. 

Meanwhile, the multifamily market continued to see high interest rates, leading to a slowdown in new developments and investment volumes. However, many markets reported experiencing continued strong demand resulting in positive rent growth.  

In the retail market, demand in the first half of 2024 was mixed and changing with continued low vacancy rates. Newer urban centers, upscale mixed-use developments and community shopping centers thrived, though overall retail rent increased in the South and West. Mixed-use developments increased in in the central and East regions.  

Lastly, the national industrial market saw strong demand and rising rents, with e-commerce and supply chain needs driving demand and increasing rental rates. Additionally, adaptive reuse is gaining momentum nationwide, especially in major cities where industrial land is scarce.