Despite inflationary pressures and higher interest rates, the Urban Land Institute’s Spring Economic Forecast predicts full employment recovery and growth by the end of the year as well as strong gross domestic product growth “continuing at rates comparable to the pre-pandemic decade by 2024.”

“In many ways, 2021 was a remarkable year for many economic and real estate indicators, as the United States recovered from the pandemic-related downturn, aided by stimulus spending and near-zero interest rates,” wrote William Maher, director of strategy and research at real estate consulting firm RCLCO.

The semiannual survey of economists and analysts at national real estate organizations, completed March 24 to April 13, covers the forecast period of 2022 through 2024. The survey addresses 27 key economic and real estate indicators, ranging from gross domestic product and employment figures to commercial real estate transactions and property sector performance,

Some projections:

  • Commercial real estate transaction volume reached a historic high of $846 billion in 2021, almost double the pandemic-year low of $431 billion in 2020. Levels are expected to moderate during the forecast period but still exceed pre-pandemic highs, with $800 billion in 2022, $725 billion in 2023 and $750 billion in 2024.
  • Price growth increased by 19.5% in 2021, almost triple the price growth in each of the five previous years when growth in those years was already above their long-term average. Price growth in 2022 is expected to moderate to be a strong 10% before moderating further to 6% in 2023 and 5.9% in 2024.
  • Change in vacancy and availability rates is expected to be minimal in the forecast period across property types. Industrial availability will remain low and essentially plateau, apartment vacancies will remain tight and only inch up, and retail vacancies will remain steady at slightly below their long-term average. Office vacancy rates are expected to stay elevated and plateau at above their long-term average.

“[W]e can anticipate post-pandemic growth will be rooted in strong regional markets and robust opportunities in the build-to-rent segment,” Urban Land Institute Global CEO Ed Walter stated. “The projections tell us that although the prospects of a recession have increased, the impact on real estate should be limited.”