June 2024: Buoyant Job Market, Growing Tourism and Renewed Capitol Hill Activity Holding Steady but Not Enough to Boost Latest CBRE Vibrancy Rating

A resilient job market, escalating mobility and tourism, and increasing legislative activity on Capitol Hill weren’t enough to negate the influence of a commercial real estate market that has yet to find its footing. The REVIVE index declined 1.3% to a level 64.6 this month.

The latest index reading is 12.2% below May 2023’s figures. However, the current declines mask subtle improvement in the previous two months of the index—these improvements are largely due to rising mobility and visitation and upward revisions in labor market data.

The latest index reading continued to benefit from momentum in these indicators as well as improving legislative activity on Capitol Hill. Our Political Inertia component rose 3% from the previous month. The Mobility and Visitation component is up 51.3% year-to-date in 2024 versus only 23.7% during the same period in 2023.

Nonetheless, commercial real estate challenges have intensified. Valuations continue to be weakened by higher interest rates and relatively soft demand for space. Property sales, which contribute an attractive revenue source for local municipalities, remain subdued.

There are signs of stabilizing valuations—particularly in industrial and retail properties—as economic trends remain stable and interest rate expectations become more reasonable. Ultimately, commercial real estate is in a better place than it was one year ago and that should support near-term vibrancy in the region and index.