CRE’s Comeback Is all About the Details

Headline statistics in commercial real estate can frequently tell a compelling story. For example, the national industrial and multifamily vacancy rates have trended similarly in recent quarters, suggesting that both sectors are nearing stability.

That would be welcome news for interested investors. But in CRE, aggregated data can mask meaningful variation at the market and submarket levels, providing incomplete information about the overall health of a sector. Momentum—the trajectory and pace of change in market fundamentals—can differ sharply once you look beyond the top-line number. In the case of vacancy rate, one of the two key equilibrium variables in CRE, that’s certainly proving true now. But how?

The multifamily and industrial markets are at an interesting juncture, standing somewhat apart from the two other major property sectors—office and retail. For office, the future remains highly uncertain. While we’ve seen early signs of improvement, the sector is still far from vacancy rate stabilization, which means that investors will need to pick their spots very carefully.

For retail, the sector has transformed remarkably over the past 15 years, right-sizing inventory and driving the national vacancy rate down to historically low levels, and certainly the lowest of the major property types. Multifamily and industrial are somewhere between these two extremes and likely headed for a cyclical recovery. Moreover, surface-level data is making noteworthy differences. This is where disaggregated data can prove useful.

Broad metrics can guide initial impressions, but informed decisions come from looking under the hood.

In the case of multifamily, the national vacancy rate is nearing stability after broad-based improvement. Many markets across the country are seeing declining vacancies, positive absorption and, in some cases, stabilizing or rising rents. Of note, the percentage of markets with declining vacancy rates has been trending upward over time. Moreover, these trends even exist at the submarket level, which indicates a more evenly distributed recovery.

Industrial, however, tells a different story. While the national vacancy rate is also showing signs of stabilization, similar to multifamily, a closer examination reveals more concentrated gains. The percentage of markets with a declining vacancy rate has been relatively flat after trending downward in recent years. Additionally, we see the same pattern when looking at industrial submarkets. That means the early stabilization we observed in industrial is much more concentrated, driven by fewer markets and submarkets, and consequently more micro factors.

But why does this matter? Momentum matters because it helps investors, lenders and operators understand whether a recovery is truly entrenched and gaining hold or is simply concentrated in relatively few outperforming locations. National figures can easily overstate the strength of demand when growth is narrow, and they can understate risk when weakness is not properly considered.

Momentum matters because it helps investors, lenders and operators understand whether a recovery is truly entrenched and gaining hold or is simply concentrated in relatively few outperforming locations.

This underscores the need for granular, location-specific analysis. That’s why we increasingly focus our analysis—including momentum and rent growth—on macro and micro levels. Forecasting changes in vacancy, absorption and rent growth at the market and submarket level provides a clearer picture of whether momentum is sustainable and pervasive. It also allows us to identify markets poised to lead a recovery versus those that may lag, despite what national headlines suggest.

In a market as nuanced and localized as CRE, understanding the distribution of momentum is as important as recognizing its direction. Broad metrics can guide initial impressions, but informed decisions come from looking under the hood—where the real story of recovery often resides.

Ryan Severino is the chief economist & head of research at BGO, where he is responsible for global and regional economic research, analysis and forecasting as well as property market research, insights and forecasting. Additionally, he is an adjunct professor at Columbia University and New York University. Severino holds a master’s degree from Columbia University, a bachelor’s degree from Georgetown University, and is a CFA charterholder.

Read the September 2025 issue of CPE.