Crexi National Commercial Real Estate Report: December 2024

Retail

For Sale

Pricing: The median asking price for retail properties in December 2024 was $269.06 per square foot, while the median sale price was $198.63 per square foot. While sellers are coming down on pricing headed into 2025, the sold price per square foot is only up 0.5% year-over-year, signaling a closing of the bid-ask gap.

Cap Rates: Asking cap rates for retail listings hovered at 6.51%, while sold properties posted a median cap rate of 6.66%. Risk for retail still remains, but both parties in completed deals are better-aligned on cap rates and approaching transaction conversations from that shared perspective. Retail holds the lowest cap rates among other asset classes in December on Crexi.

Absorption: The absorption rate for retail properties on Crexi stood at 1.65%, signaling a 31 basis point increase in transaction volume on the platform compared to the previous month, likely due to parties wishing to complete deals ahead of the calendar year’s end.

For Lease

Asking vs. Effective Lease Rates: Retail asking rates averaged $18.37 per square foot annually for the second consecutive month in December, while effective lease rates climbed to $19.44 from the previous month. This rental growth signals sustained demand and increased competition among tenants.

Broader Trends

The retail real estate market is experiencing renewed interest from investors, particularly in open-air neighborhood shopping centers anchored by grocery stores. These centers have seen rising occupancy rates due to steady foot traffic and the resilience of services that are less susceptible to e-commerce competition. Major investments, such as Blackstone’s $4 billion acquisition of Retail Opportunity Investments, highlight this trend. 

Flexible work schedules have increased visits to local centers as more people work from home, enhancing the appeal of suburban strip centers. Higher building costs and stagnant retail rents have made investment in existing centers more attractive than new construction, benefiting current landlords. While growth in retail might not be as spectacular as in warehouses or data centers, the sector offers steady returns due to long-term leases. However, enclosed malls continue to struggle with high operational costs and online competition, though falling vacancy rates hint at future potential.

Office

For Sale

Pricing: Office properties had a median asking price of $230.44 per square foot in December 2024, with a median sale price of $151.94 per square foot.

Cap Rates: Asking cap rates for office properties reached 7.11% in December, the first uptick after four months of decreasing risk. Sold properties had a slightly higher median cap rate of 7.65%; still high associated with high office vacancies, but lower than the previous month’s 7.71% average.

Absorption: Office absorption rates on Crexi jumped up from a November 2024 low to 1.67%, underscoring somewhat renewed transaction activity in the otherwise uncertain sector.

For Lease

Asking vs. Effective Lease Rates: Asking office lease rates averaged $20 per square foot annually for the fourth month in a row, while effective lease rates rose $19.10, reflecting more closed Class A deals and an increasingly competitive space for high-quality office availability among tenants actually searching for space.

Broader Trends

The office sector continues to haggle with the adapting of remote and hybrid work models, as well as a “flight to quality” with tenants seeking higher quality, amenity-rich spaces. Many Class B and C office buildings are experiencing high vacancy rates, leading to a decline in property values and increased financial distress among landlords. 

In response, there is a growing interest in converting underutilized office spaces into residential housing to address housing shortages and repurpose vacant properties. From 2021 to 2024, the number of office-to-apartment conversions surged by 357%, with 55,000 conversions recorded. By 2025, a substantial amount of office space, potentially up to 1.38 billion square feet, is expected to be repurposed into housing.

Industrial

For Sale

Pricing: Industrial properties saw median asking prices of $109.49 per square foot, with sale prices stabilizing at $99.06 per square foot, up slightly from a sharper sold pricing drop in November.

Cap Rates: After a year straight of growth, asking cap rates dipped for the first time to 7.38% in December, while sold industrial properties recorded a median cap rate of 7.27%. This narrow spread highlights a clearer understanding between buyers and sellers and higher likelihood of effectively closing deals.

Absorption: In kind, absorption rate for industrial properties jumped by 34 basis points to 1.38% in December, supported by robust demand for warehouse and logistics facilities.

For Lease

Asking vs. Effective Rates: Asking lease rates for industrial spaces averaged $13.59 per square foot annually, while effective rates were slightly below at $12.23 signaling strong demand and limited landlord concessions.

Broader Trends

The industrial real estate sector continues to perform robustly, driven by sustained demand for logistics and distribution facilities. However, the sector faced a setback in 2024 due to oversupply, leading to a temporary slowdown. Experts forecast a resurgence in 2025 as new supply decreases and demand increases, especially amid regulations promoting reshoring of manufacturing practices. 

The success of e-commerce and the need for efficient supply chain management have been significant drivers of this demand. Additionally, there is highly increased interest in non-warehouse industrial properties and growing flexibility for data center facilities, with a lack of existing supply driving developer interest in the sector.

Multifamily

For Sale

Pricing: Multifamily properties posted a median asking price of $165.85 per square foot and a median sale price of $206.68 per square foot, demonstrating sustained demand for higher quality assets in in-demand markets.

Cap Rates: Asking cap rates stood stagnant at 7.01%, flat from the previous few months, while sold multifamily properties had a median cap rate of 6.39%, reflecting strong investor appetite but increasing buyer caution.

Absorption: Multifamily absorption rates jumped noticeably to 2.17%, driven by continued demand for rental housing and a desire to close pending deals before the end of 2024.

Broader Trends

The multifamily sector remains a top performer in commercial real estate, bolstered by population growth and a rising preference for renting. The ongoing housing affordability crisis and limited homeownership opportunities are key drivers for multifamily demand. 

Markets with strong job growth and favorable economic conditions are outperforming coastal cities, which face regulatory and affordability challenges. Institutional investors are increasingly targeting build-to-rent (BTR) communities as a hybrid asset class, blending the benefits of multifamily and single-family housing. Additionally, sustainability initiatives, such as energy-efficient retrofits, are becoming essential for attracting both tenants and investors.

Regional Breakdown: Median Cap Rates & Changes by Top MSAs – December 2024

Disclaimer: This article's information is based on Crexi's internal marketplace data and additional external sources. While asking price in many ways reflects market conditions, variations in pricing are affected by changes in inventory, asset size, etc. Nothing contained on this website is intended to be construed as investing advice. Any reference to an investment's past or potential performance should not be construed as a recommendation or guarantee towards a specific outcome.

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