Economic resilience, rising retail sales, and macroeconomic indicators such as GDP growth and rate cuts shape US commercial real estate, though challenges persist in development costs, refinancing, and multifamily construction.

The latest report from Altus Group highlights the key economic and real estate trends influencing the US commercial property market as we close out 2024. Retail sales rose in November, driven by increased e-commerce activity and a revitalised interest in physical retail shopping, supporting demand for both retail and industrial properties. Meanwhile, the Federal Reserve reduced interest rates by 25 basis points, aiming to balance strong economic activity with elevated inflation, though uncertainty around further rate adjustments creates continued ambiguity for investors and developers. Residential construction data revealed an uptick in building permits, though multifamily housing starts remain historically low as financing and development costs weigh heavily on new projects. In broader economic news, Q3 GDP revisions showed solid growth, reflecting strength in consumer spending and exports. These factors together paint a complex picture for commercial real estate: while economic resilience boosts demand for space, higher development costs, refinancing hurdles, and market uncertainties challenge long-term investment and development strategies. Industry news includes rising delinquency rates on office mortgage-backed securities, Lennar's spinoff of its landholding into a REIT, and significant retail resilience during Black Friday, underscoring shifting dynamics within the commercial property market. As markets adapt to these forces, the coming months are poised to bring further adjustments across asset classes, policy decisions, and consumer behaviours.