CompStat: 18.5% Rent Growth, a 24.4% Industrial Drop, and Easing Retail Concessions

Three Numbers to Know This Week:

Economic News/Updates

Tariffs and Trade:

• Goods imports rose 15.5% year over year in May, reversing eight straight months of declines that included three months of double-digit drops.
• Container volumes were mixed in May: Los Angeles (~840,000 TEUs) and Long Beach (~842,000) remained well below their July 2025 peaks, while New York/New Jersey (~792,000) held above year-ago levels and Houston hit a cycle high (~398,000), pointing to a cooling but uneven slowdown in import flows.

Labor Market Conditions:

• Initial jobless claims averaged about 222,500 per week in June 2026, up from roughly 208,000 in March, a modest uptick that remains within the narrow range of the past year and doesn’t yet signal a meaningful shift in labor market conditions.
• Unemployment eased slightly to 7.1 million in June from 7.3 million in May, still above March’s 7.24 million low, as office-using employment rebounded to 1.94 million after March’s dip to 1.63 million, while other private hiring held near 4.86 million and government employment rose to 800,000, its highest level since mid-2025.

Consumer Sentiment and Inflation:

• The Federal Reserve Bank’s Survey of Consumer Expectations showed that median one-year-ahead inflation expectations rose to 3.7% in June, up from 3.4%-3.6% over the prior three months. The three-year outlook ticked up to 3.3%, a bit above its recent 3.0-3.1% range.
• Consumer sentiment fell to 44.8 in May, down from 49.8 in April and 53.3 in March, a third straight monthly decline that pushed the index below the mid-2022 low of 50.0 to its lowest level in years.

State of the Economy and Recession Risk:

• May retail sales rose to $228.7 billion, up 0.4% from April and about $3.8 billion above January’s low, marking three increases in the last five months.

Office: Manhattan Office Leasing Posts Its Strongest Run Since 2002, with Legal Tenants Leading the Way

Manhattan office leasing posted its strongest first-half run since 2002, according to a recent Commercial Observer article citing Colliers, with Q2 2026 volume reaching 11.02 million square feet and net absorption of 3.51 million square feet. A second Commercial Observer article points to legal tenants as a major driver of that volume, with law firms accounting for 17.1% of Manhattan leasing so far in 2026, per Savills, up from 11% for all of 2025.

CompStak data confirms the leasing momentum is showing up in pricing, though not evenly. The Columbia CompStak Rent Index (CCRI) reached a post-COVID high in Q1 2026, up 18.5% year over year. Still, the tenants driving volume aren’t the ones paying the highest rents: FIRE tenants closed 2026 year-to-date deals at a weighted average starting rent of $96.37/SF, ahead of legal services at $88.32/SF and TAMI at $80.72/SF. The ten highest average starting rents for 2026 are concentrated in five Midtown submarkets, Hudson Yards, Park Avenue, Madison/Fifth Avenue, Grand Central, and Sixth Avenue, plus one Midtown South outlier in Hudson Square, ranging from roughly $174/SF to more than $300/SF. Market rents in these submarkets also run well ahead of in-place rents: Hudson Yards shows the widest spread between market and current rent at 49.1%, against a citywide average of 19.9%, while the tightest spread among the top submarkets is 13.7%. At the deal level, Nscale Global Holdings’ 7,204-square-foot lease at 1 Vanderbilt Avenue topped $320/SF, nearly four times the Grand Central submarket average, and Eldridge Industries’ 20,000-square-foot lease at 125 West 57th Street landed at 3.2 times the Sixth Avenue submarket average.

Industrial: Inland Empire Industrial Starting Rents Fall 24.4% From Peak as In-Place Rents Keep Climbing, Even as Trade Policy Uncertainty Clouds the Region’s Outlook

The July 1 deadline for the U.S. to extend the USMCA passed without action, a lapse whose implications for supply chains were already being weighed, as noted by a recent CommercialCafe report. That shift into a rolling annual review leaves cross border automotive and manufacturing supply chains facing prolonged planning uncertainty, even as national industrial vacancy held near 8.8% in May amid a broader slowdown in rent growth versus two years earlier.

CompStak leasing data shows weighted starting rent on newly executed deals and weighted current rent across in place leases moving apart in some markets and closing together in others. In the Los Angeles, Orange County and Inland Empire market, starting rent peaked at $17.64 per square foot in Q2 2023 and has since fallen 24.4% to $13.33 by Q2 2026, while current rent kept climbing to $15.32, a gap that widened to as much as 31.3% below starting rent in Q1 2023 before reversing, peaking at 17.2% above it in Q1 2026 and easing to 14.9% by Q2 2026. Dallas Ft. Worth shows the opposite pattern: above the in place average every quarter since late 2021, with the premium widening to a peak of 20.7% by Q1 2024, narrowing to 13.5% by Q1 2026, then widening again to 18.1% by Q2 2026. New Jersey narrowed to 5.7% above parity in the most recent quarter, while Philadelphia widened further, to 19.1% above parity, as of Q2 2026.

Retail: Bay Area Retail Concessions Ease as Suburban Rents Show Relative Strength

A recent JLL California Retail Outlook, covered by GlobeSt.com, points to San Francisco’s accelerating recovery, with renewed office re-occupancy and urban demand helping stabilize a Bay Area retail market that posted its first quarter of positive net absorption in over a year. That stabilization shows up clearly in CompStak’s concession data for the region. Free months as a share of lease term in CBD retail deals climbed from 2.1% in Q4 2019 to a peak of 3.4% in 2023, before reversing to 2.3% by Q2 2026, with landlords pulling back on concessions as leverage shifts back in their favor. Suburban markets tell a more dramatic version of the same story: free months ratio rose from 1.8% in Q4 2019 to a peak of 3.9% in late 2024 and early 2025, more than double its pre-pandemic level, before falling back to 2.3% by Q2 2026, converging with the CBD figure for the first time in years. CompStak rent data shows CBD retail deals signed in the past 12 months average $33.06 per square foot, well below the $36.30 average current rent across in-place CBD leases, a $3.24 gap reflecting escalations on older leases rather than a rent trend. Suburban rents show a narrower gap: $28.22 per square foot in new deals versus $28.71 current, just $0.49 apart. The tighter Suburban spread points to greater relative strength in new deal pricing, with CBD’s new leasing lagging further behind its in-place base.