CompStat: March Madness Markets & Trends

March Madness isn’t just heating up the courts—it’s shaking up commercial real estate, too. In this special edition of our CompStat series, we’re spotlighting key markets hosting this year’s biggest games, including Tampa, San Francisco, Northern, NJ (Newark, and Atlanta. From San Francisco’s tech-fueled office rebound to Atlanta’s shifting retail landscape, we’re diving into the latest CRE trends and CompStak data shaping these tournament cities.

Economic News Updates

• Consumer sentiment plunged in March to 57.9, a 10.5% drop from February and its lowest reading since November 2022;
• Retail and Food Services Sales fell to an eight-month low in February as consumers held back discretionary spending amid growing inflation concerns and uncertainty surrounding tariffs;
• Retailers have enough inventory stocked for 1.3 months of sales, per the retail inventories to sales ratio. The ratio ticked upward 20 basis points from December’s reading in January, holding at or above 1.3 for 10 consecutive months;
• Core CPI came in 20 basis points lower in February than the previous month, declining to an annual 3.1%, per the Consumer Price Index;
• The Port of Los Angeles handled 801,398 TEUs in February, up 2.5% year-over-year and marking its second busiest February on record;
• Warehouse capacity declined for the second consecutive month in February to 50.5, its lowest reading since last turning negative in March 2024, indicating logistics managers are expecting less warehouse capacity in the coming months, per the Logistics Managers Index;
• Total job openings fell year-over-year in January, with office-using roles down 8.3% and other private-sector openings down 9.9%, aligning with a 9.1% rise in total unemployment in February;
• PCE index rose an annual 2.5% in January, down slightly from December’s 2.6% reading, according to estimates from the Bureau of Economic Analysis;
• Smoothed U.S. recession probabilities rose to 0.26% in January, their highest level since October 2024. Historically, three consecutive months of smoothed probabilities above 80% has been a reliable signal of the start of a new recession.

Check out more economic insights below:

AI and Tech Leasing Boost San Francisco/Bay Area Office Activity, but Rents Are Still Below 2019 Levels
Big Tech companies, including Google, Meta, Nvidia, Amazon, and Tesla, are driving a return-to-office resurgence in Silicon Valley, with employee foot traffic at major campuses reaching nearly 70% of pre-pandemic levels at least three days a week, which is boosting leasing activity, especially in well-located offices.  Overall, the Bay Area secured 11 of the largest U.S. office leases in 2024, driven primarily by tech companies expanding their footprints amid a new growth cycle. Although office vacancy remains elevated, momentum from AI-driven hiring is positioning the region for more leasing activity in 2025. According to CompStak data, AI and tech are providing a strong tailwind for the market, with their combined share of leasing activity rising from 30% in 2023 to 40% in 2024—AI accounting for 15% and tech for 25%. Still, San Francisco and the broader Bay Area remain laggards in the office market recovery compared to other major markets. CompStak’s effective rent data shows the region ranked 9th out of 10 markets in rent recovery in the latest CompStak office report across all office classes in both the CBD and suburban submarkets.

New Landlord of East Atlanta Village Portfolio Setting Starting Rents Above Recent Market Rent Levels

Canvas Companies, after acquiring an East Atlanta Village portfolio for $6.6 million in February, will negotiate starting rents with new tenants at lease turnover, likely under $33 per square foot. The Atlanta Business Chronicle reports that, although asking rent for new tenants has not been determined, the firm said it expected to ask less than $33 per square foot. According to CompStak’s data, this rate outpaces recent Atlanta rents. The newly acquired portfolio is located within CompStak’s suburban submarket of Northlake. Suburban Atlanta retail starting rents continued trending upward in 2024 to an average of $18.20 per square foot, an 11.3% increase over 2023. This contrasts with retail starting rents in CBD/urban Atlanta, which declined 20.5% in 2024 from 2023 to an average of $27.79 per square foot but are still up by more than 64% since 2020. The submarkets of Buckhead, Cumberland, and Downtown have driven the CBD/urban growth since 2020. Among the highest CBD/urban starting rents in 2024 was Aldo, who signed 1,587 square feet for $161 per square foot in the Cumberland Mall in the Cumberland submarket. In addition, one of the highest starting rents in 2024 among suburban leases was signed by Watches of Switzerland, who signed for 3,313 square feet for $185 per square foot in the Parkway of Avalon in the North Fulton submarket.

Thor Equities’ Recent Bridgewater, NJ Industrial Buy Has Below-Market Rents in North and Central NJ
Thor Equities continues to grow its industrial presence in New Jersey with the acquisition of an 18-property portfolio totaling 580,000 square feet. The real estate firm acquired the industrial park known as Middlebrook Crossroads for $111 million. The average building size of Thor’s new portfolio is approximately 32,000 square feet, with the average lease transaction size is just under 20,000 square feet, according to CompStak data. The average current rent being paid today by tenants at Middlebrook Crossroads is $11.86 per square foot, according to CompStak data, which is 11.6% lower than CompStak’s estimated market rate estimate of $ 13.24 per square foot for Middlebrook Crossroads.

Tampa Bay’s Suburban Retail Market is on the Upswing, with Developers Focused on Pasco County
 Pasco County’s retail market is booming, driven by residential growth and available land. Major projects include a large Target in Wesley Chapel and the $2 billion DoubleBranch development. With low vacancy and high demand, rental rates now exceed those in neighboring counties, making it a landlord’s market. Pasco County, which includes the CompStak Spring Hill Dade City submarket, accounted for two of the top five retail deals by total consideration in CompStak’s data from 2024 to date. These deals included a Lowe’s lease of 137,554 square feet at 2317 Gunn Highway and Crash Champions’ commitment to 32,500 square feet at 5602 Land O’ Lakes Boulevard. Overall, the average starting rent in the Tampa Bay market is $22.78 per square foot and has trended up 52.2% from 2019.