{"id":152372,"date":"2023-05-09T13:30:32","date_gmt":"2023-05-09T19:30:32","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=152372"},"modified":"2023-08-11T13:37:13","modified_gmt":"2023-08-11T19:37:13","slug":"its-official-commercial-real-estate-is-collapsing","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/its-official-commercial-real-estate-is-collapsing","title":{"rendered":"It&#8217;s Official\u2014Commercial Real Estate Is Collapsing"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC5464003703\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">The residential real estate market is doing better than most had expected after interest rates more than doubled last year. Prices declined nationally each month from July 2022 to January 2023 (although never by more than 1% per month). However, prices&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/fortune.com\/2023\/04\/25\/housing-market-correction-runs-on-fumes-case-shiller-reports-home-price-gain\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">came back up 0.2%<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in February. Ironically, February was the first month&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-prices-finally-decline-year-over-year-after-131-straight-months-of-increases\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">that prices dipped year-over-year<\/span><\/a><span data-preserver-spaces=\"true\">, interrupting what was a record 131-month run of ever-increasing prices. It\u2019s too early to say, but it appears that despite high rates, the residential market is stabilizing.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">It&#8217;s not quite so pretty for commercial real estate, particularly office, though.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Office Recession<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Back in October of last year,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/the-coming-collapse-of-downtown-office-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">I noted that<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;\u201cbroadly speaking, the outlook for commercial real estate, specifically office buildings, is not great. And large office buildings, in particular, are doing poorly and will have difficulty in the coming years.\u201d The reasons were threefold. First, the pandemic and lockdowns shuttered a lot of businesses, many permanently, and this led to a general deterioration of the existing stock and reduced demand for office space.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Second, work-from-home has become more prevalent in recent years, and Covid only accelerated that. One prominent economist even went so far&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnbc.com\/2023\/03\/03\/the-future-of-remote-work-labor-experts-weigh-in.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">as to say<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;full-time office work is \u201cdead.\u201d While many companies are&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.businessinsider.com\/companies-making-workers-employees-return-to-office-rto-wfh-hybrid-2023-1\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">mandating employees return to the office<\/span><\/a><span data-preserver-spaces=\"true\">, at least part of the time, the increase in work-from-home arrangements has obviously put downward pressure on the demand for office space.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Lastly, there\u2019s been a notable increase in crime in many cities. While the issue of crime predominantly affects retail, it also hinders offices, particularly in downtown areas that employers tend to pay a premium for because of the popularity of those areas. As the popularity declines, so does that premium.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Still, it\u2019s retail (discussed further below) that has been the hardest hit by crime, with many major retailers closing shop in various cities. Notably, Walmart has closed half its stores in&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.dailymail.co.uk\/news\/article-11962047\/Walmart-shuts-four-stores-Chicago-halving-footprint-Illinois-city.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Chicago<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and all its stores in&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.kptv.com\/2023\/02\/23\/2-portland-walmart-stores-close-march\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Portland<\/span><\/a><span data-preserver-spaces=\"true\">. Target announced it had sustained&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.businessinsider.com\/target-losing-millions-to-organized-retail-theft-2022-11\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">$400 million in losses<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;due to shoplifting, and Walgreens has closed 10 locations in&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.sfgate.com\/bayarea\/article\/Another-San-Francisco-Walgreens-closing-16848319.php\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">San Francisco<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And speaking of San Francisco, it has been hit particularly hard by all three of these trends. Office, in particular, has taken a beating,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/sfstandard.com\/research-data\/san-francisco-commerical-real-estate-crash-office-space-sublease\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">as this chart<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;for office vacancies from&nbsp;<\/span><em><span data-preserver-spaces=\"true\">The San Francisco Standard<\/span><\/em><span data-preserver-spaces=\"true\">&nbsp;makes plainly evident.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"660\" height=\"392\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image2-1.jpg\" alt=\"Historical Office Vacancy Rate in San Francisco (2000-2022) - The San Francisco Standard\" class=\"wp-image-152381\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image2-1.jpg 660w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image2-1-300x178.jpg 300w\" sizes=\"auto, (max-width: 660px) 100vw, 660px\" \/><figcaption class=\"wp-element-caption\"><em>Historical Office Vacancy Rate in San Francisco (2000-2022) &#8211; <a href=\"https:\/\/sfstandard.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">The San Francisco Standard<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p><span data-preserver-spaces=\"true\">This wasn\u2019t hard to predict, as&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/the-coming-collapse-of-downtown-office-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">I noted last year<\/span><\/a><span data-preserver-spaces=\"true\">, the way commercial leases are structured made this all but inevitable,<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cThe reason we can know for certain that this problem is going to get worse is the way commercial leases are structured. Unlike the typical lease on a home or apartment unit, commercial leases are usually 3-5 years long and sometimes more.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cDowntown commercial real estate was already declining before 2020, but the pandemic turbocharged that decline. Many of the firms that signed leases in 2017, 2018, and 2019 are stuck in those leases for a few more years. But all signs point toward a large number of them leaving after the end of their lease.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cSo, if you think vacancy is high now, I\u2019d recommend you buckle up.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The trough of this office recession in San Francisco will likely take place in 2025 when 2 million square feet of office space will have its lease expire. (In 2023 and 2024, it is about 800,000 and 1.2 million, respectively.)&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">While San Francisco may have it the worst, office across the whole country has suffered.&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/cbre.vo.llnwd.net\/grgservices\/secure\/Q1%202023%20U.S.%20Office%20Figures.pdf?e=1683006592&amp;h=cac79486c4d0bd64b4494b18e32079f9\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">CBRE notes<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;that \u201cQ1 [of 2023] saw 16.5 million sq. ft. of&nbsp;<\/span><em><span data-preserver-spaces=\"true\">negative<\/span><\/em><span data-preserver-spaces=\"true\">&nbsp;net absorption\u201d (italics mine). That is not exactly a positive sign.&nbsp;<\/span><\/p>\n\n\n\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/cre.moodysanalytics.com\/insights\/cre-trends\/q1-2023-preliminary-trend-announcement\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">This chart<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;from Moody\u2019s shows that after a brief and shallow recovery from the pandemic in 2021, office vacancy rates have again started to increase and are now near 20%, an increase of about 15% since the beginning of 2018. Furthermore, rent increases, having fallen dramatically during Covid before rising in 2021, are starting to move back toward zero while inflation is still high.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"317\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image4-1.jpg\" alt=\"Effective Rate Change Compared to Vacancy Rate for Office Real Estate (2018-2023) - Moody&#039;s Analytics\" class=\"wp-image-152379\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image4-1.jpg 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image4-1-300x93.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image4-1-768x238.jpg 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\"><em>Effective Rate Change Compared to Vacancy Rate for Office Real Estate (2018-2023) &#8211; <a href=\"https:\/\/cre.moodysanalytics.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Moody&#8217;s Analytics<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p><span data-preserver-spaces=\"true\">Perhaps another way to visualize this is by looking at how Alexandria Real Estate Equities,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.financecharts.com\/sectors\/real_estate\/office_reits\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">the biggest office REIT in the country<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;by a factor of more than two, has performed in the last two years. Not well, to say the least. Its stock price has almost halved from a peak of $223 a share in December of 2021 to&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.financecharts.com\/stocks\/ARE\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">$124.18 at the time of this writing<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"904\" height=\"310\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image3-1.jpg\" alt=\"Alexandria Real Estate Equities (ARE) Stock Price (2020-2023) - Finance Charts\" class=\"wp-image-152380\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image3-1.jpg 904w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image3-1-300x103.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image3-1-768x263.jpg 768w\" sizes=\"auto, (max-width: 904px) 100vw, 904px\" \/><figcaption class=\"wp-element-caption\"><em>Alexandria Real Estate Equities (ARE) Stock Price (2020-2023) &#8211; <a href=\"https:\/\/www.financecharts.com\/stocks\/ARE\" target=\"_blank\" rel=\"noreferrer noopener\">Finance Charts<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p><span data-preserver-spaces=\"true\">Other office REITs have performed similarly in the last year or two.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And unfortunately, this trend is likely to be with us for a while. Given how leases are structured and the hard reality that of the three factors driving this decline (the pandemic, work from home, and crime), the pandemic seems to be the only one that has ended or is likely to end soon. And given there is still&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/apnews.com\/article\/inflation-united-states-government-recessions-and-depressions-economy-business-c14699b792454e4d2d3d642d65ff4395#:~:text=Fifty%2Deight%20percent%20of%2048,the%20NABE&#039;s%20survey%20in%20December.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">a strong possibility of a recession<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;later this year or in 2024, there isn\u2019t much cause for optimism.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This situation can further be seen from&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cbre.com\/insights\/reports\/us-cap-rate-survey-h2-2022\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">a survey CBRE did early this year<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of 250 real estate professionals. Over half expect CBD office (central business district) and suburban office cap rates to increase 25 basis points or more (i.e., the price of such buildings will go down). And virtually no one expects cap rates to compress.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The only other sector with such a similarly bleak outlook is retail.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1600\" height=\"849\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image6-1.jpg\" alt=\"Expectation of Basis Point Increases in Cap Rates (2022) - CBRE\" class=\"wp-image-152377\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image6-1.jpg 1600w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image6-1-300x159.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image6-1-1024x543.jpg 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image6-1-768x408.jpg 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image6-1-1536x815.jpg 1536w\" sizes=\"auto, (max-width: 1600px) 100vw, 1600px\" \/><figcaption class=\"wp-element-caption\"><em>Expectation of Basis Point Increases in Cap Rates (2022) &#8211; <a href=\"https:\/\/www.cbre.com\/insights\/reports\/us-cap-rate-survey-h2-2022\" target=\"_blank\" rel=\"noreferrer noopener\">CBRE<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Is There a Retail Recession Too?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The pandemic is thankfully over, and retail is not something that can easily be done from home. Unfortunately, as noted earlier, crime problems affect retail the most. In addition, retail also has to worry about the Amazon problem. E-commerce as a percentage of total retail sales has grown from less than 5% in 2010 to 14% in 2020 and&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnbc.com\/2021\/06\/18\/as-e-commerce-sales-proliferate-amazon-holds-on-to-top-online-retail-spot.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">is projected to be 23.5% by 2025<\/span><\/a><span data-preserver-spaces=\"true\">. Amazon accounts for over 40% of online retail sales.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Furthermore, inflation has pinched American pocketbooks and caused some to buy less. This can be hidden by raw sales reports because, for example, if you buy three widgets worth $10 one year and then next year, the widgets are $15, so you only buy two. Both years would still amount to $30 in sales. But inflation doesn\u2019t necessarily mean that the profit margins are bigger on any given widget.<\/span><\/p>\n\n\n\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/morningconsult.com\/2022\/10\/17\/grocery-inflation-continues-consumers-buy-less\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">One survey<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;found 72% of Americans reported \u201cbuying fewer items\u201d when grocery shopping in 2022 as compared to 64% in 2021. Even still, retail sales (in terms of dollars spent)&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/tradingeconomics.com\/united-states\/retail-sales\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">have fallen in four of the last five months<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and are mostly flat since early 2021.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Still, as far as vacancy rates go, retail is doing substantially better than office,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/cre.moodysanalytics.com\/insights\/cre-trends\/q1-2023-preliminary-trend-announcement\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">albeit not great<\/span><\/a><span data-preserver-spaces=\"true\">. It has recovered from the increase during Covid but settled in almost 50 basis points above where it was in 2018. Rents have been steadily increasing after major declines during Covid but still trail inflation substantially.&nbsp;<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"317\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image5-1.jpg\" alt=\"Effective Rate Change Compared to Vacancy Rate for Retail Real Estate (2018-2023) - Moody&#039;s Analytics\" class=\"wp-image-152378\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image5-1.jpg 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image5-1-300x93.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image5-1-768x238.jpg 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\"><em>Effective Rate Change Compared to Vacancy Rate for Retail Real Estate (2018-2023) &#8211; Moody&#8217;s Analytics<\/em><\/figcaption><\/figure>\n\n\n\n<p><span data-preserver-spaces=\"true\">We can also look at the biggest retail REITs to get an idea of their relative performance.&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.financecharts.com\/stocks\/O\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Realty Income Corp<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;tops the chart here, and while 2022 and 2023 have not been kind to it, it\u2019s only down about 15% from its peak in August of 2022 and just a bit over 20% since its pre-Covid peak, far better than Alexandria Real Estate Equities.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"900\" height=\"263\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image1-1.jpg\" alt=\"Realty Income (O) Stock Price (2020-2023) - Finance Charts\" class=\"wp-image-152382\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image1-1.jpg 900w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image1-1-300x88.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/05\/image1-1-768x224.jpg 768w\" sizes=\"auto, (max-width: 900px) 100vw, 900px\" \/><figcaption class=\"wp-element-caption\"><em>Realty Income (O) Stock Price (2020-2023) &#8211; <a href=\"https:\/\/www.financecharts.com\/stocks\/O\" target=\"_blank\" rel=\"noreferrer noopener\">Finance Charts<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Commercial Real Estate Recession<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">While residential real estate (including apartments) and industrial are doing okay despite the high interest rates, other sectors have not been nearly as fortunate.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">While we appear to be in a shallow recession for retail, office has taken a beating.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The long-term future looks questionable for retail as Amazon and other e-commerce firms continue to eat into the share of brick-and-mortar establishments. At least in the present, though, retail appears to be stabilizing somewhat.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Office properties, however, are a different story. The situation for such properties is dire and getting worse. And it will likely be some time before such trends reverse.<\/span><\/p>\n\n\n\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find an Elite Agent in Minutes<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\"><strong>Agent Finder makes it fast, free, and easy<\/strong> <strong>to find agents that know investing.<\/strong> <br \/><br \/>Match with market experts like Peter Stewart of Indi, Brandon Ribeiro in Philly, Dan Nelson in Chicago, and Jodi Gauthier of Houston.<br \/><br \/>Build your dream team now!<\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=button-custom-event-block_6412457fc596c class='button-custom-event'>\n      <a href=\"http:\/\/biggerpockets.com\/agent\/match\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Elite Agent Rob Chevez&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/its-official-commercial-real-estate-is-collapsing&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\"><br \/><\/p>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  shadow-xl rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/04\/Elite-Agent.png\" alt=\"Use Agent Finder to find an investor-friendly agent, fast.\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Commerical real estate vacancies are surging, and it looks like it can only get worse from here. What does this mean for the market?<\/p>\n","protected":false},"author":1689,"featured_media":152386,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4433,7119,5527],"tags":[],"class_list":["post-152372","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","category-biggerpockets-daily","category-commercial-real-estate-investing"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/152372","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1689"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=152372"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/152372\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/152386"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=152372"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=152372"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=152372"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}