ShareDespite the rising unemployment rate, stock market jitters and some pause in business decisions until after the national election, the economy is unlikely to fall into a job-cutting recession. Same-store retail sales are up 5% from a year ago, airline bookings are ahead of last year, federal income tax withholdings are running ahead of forecasts and the weekly initial claims of unemployment checks are at a comfortable 300,000—a very normal churn in the job market.
As of mid-August, the GDP growth rate in the third quarter looks to be around 2%. As long as there are job additions, the demand for commercial spaces should be on the rise, apart from the office market. The increased net absorption, however, looks to trail newly completed supply from projects started a few years ago. Therefore, the near-term outlook is for higher vacancy rates and muted rent growth.
In the financial sphere, as this goes to press, we expect an interest rate cut from the Federal Reserve in September and additional rounds of cuts throughout 2025, irrespective of who sits in the White House. More credit liquidity will slowly facilitate more investment deals and lift commercial real estate prices (except for in the offi ce market). Th e temporary high oversupply will end by next year, and that means faster accelerating rent growth in 2026.
