Post-Pandemic Leasing Trends in Commercial Real Estate
Post-pandemic, commercial real estate leasing has shifted dramatically due to changing tenant needs and market dynamics. Key trends include shorter leases, a focus on modern amenities, and a preference for high-quality properties. Here's what you need to know:
- Office Spaces: Vacancy rates remain high (14.1% in Q2 2025), with demand concentrated in Class A properties offering premium features. Hybrid work models and downsizing are reshaping office layouts.
- Industrial Properties: E-commerce growth slowed, pushing vacancy rates to 7.4%. Tenants now seek advanced logistics features like automation and eco-friendly upgrades.
- Retail Properties: Strong consumer demand has driven rent growth (2.0%) and low vacancy rates, with mixed-use developments and experience-driven formats thriving.
- Geographic Shifts: Secondary and tertiary markets (e.g., Phoenix, Nashville) are attracting tenants and investors due to affordability, population growth, and business-friendly conditions.
- Tenant Priorities: Flexibility, shorter lease terms, and properties with advanced technology or sustainability certifications are top demands.
Technology, such as real-time data platforms and AI tools, is helping landlords and investors optimize leasing strategies by tracking trends, analyzing tenant behavior, and identifying opportunities in emerging markets.
The State of Commercial Real Estate in 2025
How Leasing Changed Across Different Property Types
The pandemic brought about lasting changes in leasing trends across various property types, with each sector experiencing its own set of challenges and opportunities that continue to shape the current market.
Office Properties: Recovery and Demand for Flexibility
In Q2 2025, office vacancies averaged 14.1%, with Class A properties at 20.5%, Class B at 12.0%, and Class C at 5.4%. Rent growth during the same period stood at 0.6% [8]. A notable trend is the "flight-to-quality", where tenants increasingly prioritize newer, amenity-rich spaces over older buildings [4]. For instance, in Manhattan, Class A office leasing regained its historical 41% market share, signaling a renewed sense of corporate confidence in urban areas [5].
Many companies are downsizing, leaving entire floors vacant, while others are reimagining their spaces with modern, collaborative designs. Some businesses are moving to suburban markets for more affordable rents, while others are upgrading to premium, centrally located offices to attract top talent [1]. Meanwhile, industrial properties, which once thrived on e-commerce demand, are now adjusting to changes in supply and demand dynamics.
Industrial Properties: Adapting to New Logistics Needs
Industrial properties, which initially surged due to e-commerce growth, recorded a 7.4% vacancy rate and 1.7% rent growth in Q2 2025 [8]. However, net absorption fell by 39% year-over-year to 79.7 million square feet. While the e-commerce boom and supply chain reconfigurations initially fueled demand for warehouse and distribution space, oversupply and softer demand in some areas are beginning to moderate rent growth.
Tenants now prefer facilities equipped with advanced features like automated picking systems, temperature-controlled storage, and eco-friendly upgrades [1]. In response, landlords are investing in enhancements such as automation technology, solar panels, and specialized storage solutions to attract long-term tenants. The last-mile delivery segment remains strong, as businesses continue to seek distribution centers close to urban populations. While industrial spaces evolve to meet shifting logistics needs, retail properties are finding success by embracing new formats.
Retail Properties: A Resilient Recovery
Retail leasing has emerged as one of the standout performers in the post-pandemic market. As of June 2025, retail properties boast the fastest rent growth at 2.0% annually and the lowest vacancy rates among commercial real estate sectors, with available space consistently below 5% in many regions [1][8]. Strong consumer spending and limited new supply have kept the market tight.
A key shift in retail leasing is the rise of mixed-use developments and experience-driven formats. Entertainment hubs, grocery-anchored centers, and experiential retail concepts are proving popular with both tenants and shoppers. Landlords are repurposing vacant spaces into community-focused destinations, while prime urban and suburban locations continue to thrive by offering experiences that extend beyond traditional retail.
| Property Type | Vacancy Rate (Q2 2025) | Rent Growth (Q2 2025) | Key Trend |
|---|---|---|---|
| Office | 14.1% | 0.6% | Flight-to-quality; hybrid work models |
| Industrial | 7.4% | 1.7% | Adjusting to supply and demand shifts |
| Retail | Lowest among CRE | 2.0% | Mixed-use and experience-driven formats |
The data highlights a clear hierarchy in performance: retail is leading the charge in recovery, industrial properties are evolving to meet logistical demands, and office spaces continue to grapple with structural changes, paving the way for new opportunities in emerging markets.
New Market Opportunities by Location
The pandemic reshaped where Americans choose to live and work, creating fresh opportunities in regions that were previously overlooked. As a result, investment is moving away from traditional hubs like Los Angeles toward smaller, secondary, and tertiary markets. Factors like political uncertainty, rising insurance costs, and tax concerns have driven this trend, marking one of the most dramatic shifts in commercial real estate in recent history[12].
Growing Secondary and Tertiary Markets
Cities like Phoenix, Salt Lake City, Nashville, Tampa, and Charlotte have become attractive alternatives to established markets like Los Angeles[12]. These areas are benefiting from population shifts away from pricey coastal cities and an increasing focus on reducing operating costs.
Phoenix stands out with a massive 22.4-million-square-foot industrial pipeline, drawing major e-commerce distribution centers that aim to serve the growing Southwest region[2][10].
Charlotte has seen a surge in office and mixed-use leasing as financial services companies and other businesses relocate from higher-cost cities[10].
Similarly, Salt Lake City and Nashville are gaining attention for their affordable lease rates, skilled workforces, and modern infrastructure. Tampa, on the other hand, has experienced growth in its industrial and office leasing sectors, boosted by Florida's tax advantages and a steadily increasing population[2][10].
According to U.S. Census data, population increases in Sun Belt and Midwest cities are fueling higher occupancy rates and spurring new development[10][3]. This population growth is driving demand for a wide range of commercial spaces, including office buildings, retail centers, and industrial facilities.
These shifts align with the evolving preferences of tenants, who are prioritizing affordability and access to modern infrastructure.
Top-Performing Submarkets in Major Cities
While secondary and tertiary markets are gaining traction, certain submarkets within major metropolitan areas are also thriving. These submarkets are outperforming traditional downtown cores by offering a mix of affordability, amenities, and updated building stock. Examples include Uptown in Dallas, Midtown in Atlanta, and Brickell in Miami[7][10].
These areas attract tenants looking for high-quality spaces at more competitive prices, along with vibrant live-work-play environments. For instance, Dallas's Uptown has become a hub for tech and financial firms seeking prestigious addresses without the high costs of central business districts.
Atlanta's Midtown provides a strong alternative to its downtown core with newer buildings, ample parking, and easier access for suburban commuters. Its mix of offices, residential spaces, and entertainment options creates an environment that appeals to modern tenants.
Miami's Brickell, known for its international business connections and luxury amenities, offers premium office spaces at better value compared to traditional financial districts.
Here’s a breakdown of what’s driving interest across these markets:
| Market Category | Leading Examples | Key Advantages | Tenant Attraction Factors |
|---|---|---|---|
| Secondary Markets | Phoenix, Charlotte, Salt Lake City | Lower costs, business-friendly policies | Industrial growth (Phoenix), financial services (Charlotte) |
| Tertiary Markets | Nashville, Tampa | Affordable rents, population growth | Tax benefits, skilled workforce access |
| Major Metro Submarkets | Dallas Uptown, Atlanta Midtown, Miami Brickell | Modern buildings, amenities, value pricing | Live-work-play environments, lower costs than downtown areas |
Affordability remains a key driver for tenant relocation and investor interest. In response, landlords and developers are offering competitive lease terms, upgrading properties, and focusing on markets with sustainable rent growth[7][10]. This strategy appeals to startups and growing regional businesses that may be priced out of larger, traditional markets.
Experts believe these geographic shifts will continue as long as migration trends and economic conditions remain favorable[3][11]. However, investors should carefully evaluate markets to avoid risks like overbuilding and local economic volatility.
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What Tenants Want Now
The pandemic has reshaped how businesses approach their space needs, with long-term leases becoming less appealing. Companies that once committed to 10-year agreements now tread carefully, bringing a new set of priorities to the table. This shift has impacted office, industrial, and retail sectors alike, driven by a broader need for flexibility in a post-pandemic world.
Building on trends that were already emerging, tenants today are placing a premium on flexibility, enhanced amenities, and high-quality properties.
Demand for Flexible Lease Terms
Shorter lease terms have become the norm across all property types. Businesses want the freedom to adapt to changing conditions without being tied down by long-term obligations that may no longer align with their needs.
In the industrial sector, third-party logistics providers now account for 40% of all leasing activity in 2025, up from a forecasted 35% [10]. These companies need leases that allow them to scale warehouse space up or down, depending on seasonal demand or supply chain shifts.
Office tenants leasing spaces between 10,000 and 20,000 square feet drove 104.4 million square feet of leasing activity in the first half of 2025 [10]. Many of these businesses prefer shorter leases to adjust their office footprint as hybrid work policies and workforce dynamics evolve.
Co-working and hybrid office models are also gaining traction, offering flexible arrangements that let companies optimize their space without committing to long-term leases. These setups are ideal for businesses managing split workforces, with employees alternating between remote and in-office work.
Retail tenants, on the other hand, are increasingly seeking expansion and contraction clauses. These clauses give them the ability to adjust their square footage based on performance and market conditions, allowing them to test new markets without the risk of being locked into underperforming locations.
This growing preference for flexibility is laying the groundwork for another key tenant demand: better amenities in mixed-use spaces.
Focus on Amenities and Mixed-Use Buildings
Modern tenants now expect properties to offer more than just functional space. The pandemic underscored the importance of features that promote wellness, productivity, and convenience.
While essentials like high-speed internet and advanced security systems remain top priorities, tenants now look for much more. Fitness centers, outdoor communal areas, and on-site retail or dining options have transitioned from "nice-to-have" to "must-have" features [2][11].
Mixed-use developments are particularly appealing because they combine office, retail, residential, and entertainment spaces in one location. These properties are especially attractive to companies aiming to enhance employee satisfaction and talent retention. By reducing commute times for errands and creating vibrant, engaging environments, these developments make coming to the office a more desirable experience.
Landlords are adapting by reconfiguring existing spaces to include premium amenities and tailored areas [4]. For example, unused lobby spaces are being turned into collaborative work zones, while rooftop gardens and outdoor meeting areas are becoming increasingly common.
Investments in these upgrades are paying off. Properties with well-rounded amenity packages are seeing higher rents and lower vacancy rates compared to those that have not been updated.
Preference for Higher-Quality Properties
The demand for quality has surged since the pandemic, with tenants willing to pay more for premium properties. The gap between prime and non-prime vacancy rates continues to grow as businesses prioritize modern design, sustainability, and cutting-edge technology.
Green-certified buildings now account for 22% of new commercial developments, reflecting the growing demand for environmentally responsible spaces [2][11]. These properties often feature better air quality, energy-efficient operations, and healthier work environments - qualities that became even more critical during the pandemic.
Smart building technology, once considered a luxury, is now an expectation. Tenants want features like touchless access systems, air quality monitoring, and automated climate controls to enhance safety and efficiency [2][11]. These advancements not only align with health and safety goals but also help companies meet their environmental, social, and governance (ESG) commitments.
The preference for quality is evident in vacancy rates across property classes. Class A office spaces show a 20.5% vacancy rate, while Class B properties have 12.0% vacancy, and Class C properties just 5.4% [8]. However, Class A properties offering the right mix of amenities and technology continue to attract tenants willing to pay premium rents.
Retail tenants are similarly focused on location quality and foot traffic patterns. They're willing to pay higher rents for spaces in well-maintained developments that draw the right demographics.
This push for quality is also driving redevelopment and repositioning projects. Landlords are upgrading older buildings to meet tenant expectations, while properties that can’t compete are being converted for alternative uses or undergoing significant renovations [4].
Beyond the building itself, tenants are also paying attention to the surrounding area. Properties in neighborhoods with good public transit, ample parking, and access to restaurants, services, and entertainment are in high demand. These factors play a key role in supporting employees' daily needs and improving overall satisfaction.
Using Technology and Data for Better Leasing Decisions
The post-pandemic real estate market is moving faster than ever, with tenant preferences and market dynamics shifting constantly. To keep up, professionals need technology that consolidates diverse data into a single platform. This allows them to uncover opportunities, monitor competitors, and refine leasing strategies. With leasing trends evolving, the ability to access accurate, real-time data has become essential for meeting new tenant demands.
Real-Time Data and Market Analysis
The latest market data paints a vivid picture of these shifts. Net absorption in the multifamily sector surged 20% year-over-year, reaching 531,000 units as of June 2025, while new project completions dropped by 9% [8]. Meanwhile, the industrial sector faced a 39% decline in net absorption, down to 79.7 million square feet, with new completions outpacing demand by a ratio of 4 to 1 [8].
Pricing trends also gained momentum in Q2 2025, with the median price per square foot for single-property transactions rising 5.0% compared to the previous quarter [9]. Access to real-time pricing data helps avoid underpricing properties or losing tenants to competitors.
Signs of market stabilization are also emerging. Sublease inventories have declined for three consecutive quarters as of Q4 2024, signaling a healthier environment [13]. Additionally, Class A office leasing in central business districts has bounced back to its historical 41% market share, reflecting renewed confidence from corporate tenants [5].
Professionals who succeed in this environment are those who keep a close eye on vacancy rates, rental growth trends, and lease term patterns across their portfolios and competing markets. For instance, 18 markets have exceeded pre-pandemic leasing activity, with seven more returning to over 90% of those levels [14]. Platforms like CoreCast are transforming how professionals use these insights to make smarter leasing decisions.
CoreCast: A Unified Real Estate Intelligence Platform
CoreCast tackles one of the biggest challenges in real estate: fragmented data. It’s an end-to-end intelligence platform that combines underwriting, pipeline tracking, competitive analysis, and portfolio management into one system. Users can underwrite any asset class, track deals through every stage, and analyze their properties alongside competitors.
The platform’s portfolio management tools allow users to create custom summaries instantly by selecting specific assets. Whether analyzing multifamily, office, retail, or industrial properties, this feature makes it easy to assess performance across various property types.
"Our family office needed a solution to manage legacy real estate assets." - James Gueits, Principal, MHP Operator [15]
CoreCast also includes a pipeline tracker that maps and organizes properties at every stage, from pursuit to sale. This functionality helps professionals efficiently manage leasing opportunities and inventory, replacing outdated spreadsheet systems.
The platform delivers real-time insights, updating forecasts and data continuously. This means users can see how market changes impact their properties immediately, without waiting for monthly or quarterly updates.
"They have provided the expertise and support we needed to make smarter, data-driven decisions." - Clay Heighten, Principal, Caddis Healthcare RE [15]
For stakeholder communication, CoreCast features a key stakeholder center that generates branded reports automatically. This streamlines communication with investors, partners, and lenders, ensuring everyone has access to up-to-date performance data without the need for time-consuming custom reports.
AI-Powered Leasing Insights
CoreCast takes its data-driven approach a step further with AI integration, which refines leasing strategies by analyzing factors like economic uncertainty, interest rates, and employment trends to predict tenant demand. For example, AI analysis has shown that third-party logistics (3PL) providers will grow their market share from 35% to 40% in 2025, enabling professionals to position industrial properties to meet this demand [10].
AI tools also reveal tenant-specific lease preferences. For instance, 3PL companies tend to favor shorter lease terms, while corporate tenants in the 10,000 to 20,000 square foot range drive significant leasing activity. This type of insight helps landlords craft lease agreements that appeal to their target tenants.
Predictive analytics further enhance decision-making by identifying properties at risk for high vacancy or lease non-renewal. By analyzing payment patterns, industry trends, and local market data, AI systems can alert professionals to potential issues before they escalate into costly problems.
CoreCast’s roadmap includes AI-driven automation and advanced reporting to improve predictive analysis and provide deeper leasing insights. These tools help professionals adapt quickly to market changes and uncover opportunities that might otherwise go unnoticed.
AI also enables scenario modeling, allowing users to simulate how changes in economic conditions, interest rates, or tenant demand could impact leasing strategies and financial performance across different markets and property types.
Future AI capabilities will enhance competitive intelligence by automatically tracking key metrics like rental rates, occupancy levels, and lease terms for comparable properties. By eliminating manual research, this automation ensures professionals always have the most current data for pricing and positioning decisions.
Conclusion: Managing Post-Pandemic Leasing Markets
The commercial real estate landscape has undergone a major transformation, with success now hinging on meeting tenants' shifting preferences. Flexible lease terms, premium amenities, and higher-quality properties have become the new benchmarks in both office and retail sectors [4][6][16]. Properties that fail to align with these expectations risk prolonged vacancies, while those that adapt are seeing strong leasing activity.
In this rapidly evolving market, relying on real-time data has become non-negotiable. With office vacancy rates hovering around 23% and per-square-foot prices climbing [4][9][16], professionals need accurate, up-to-date insights to make informed decisions. This shift opens the door to previously untapped opportunities.
Secondary and tertiary markets are emerging as key areas of interest. Cities like Phoenix, Austin, and Nashville are experiencing robust demand for industrial and multifamily properties [10][2]. These locations often offer higher returns and face less competition, making them appealing choices for investors looking beyond traditional urban hubs.
Technology is playing a vital role in navigating these changes. Platforms like CoreCast, which consolidate fragmented data sources, have become essential tools for the industry. They streamline underwriting, deal tracking, and competitive analysis. As Clay Heighten, Principal at Caddis Healthcare RE, explained:
"They have seamlessly provided the expertise and support we needed to streamline our operations and make smarter, data-driven decisions" [15].
The most successful strategies today blend flexibility with precision. For instance, professionals are pairing short-term leases for smaller operators with property upgrades and real-time analytics to fine-tune pricing and occupancy levels. Simon Property Group’s ability to maintain over 95% occupancy at its top-tier retail centers highlights the effectiveness of this approach [12].
Adaptability is proving to be the defining factor for success. Some firms are seeing transaction activity return to pre-pandemic levels, with investment sales soaring by 200% year-over-year in certain cases [12]. While recovery patterns vary across markets and property types, those who keep a close eye on key metrics are better positioned to seize new opportunities while minimizing risks.
Thriving in the post-pandemic leasing market requires a mix of traditional real estate expertise, modern technology, and an understanding of evolving tenant needs. Embracing these permanent changes and leveraging comprehensive market insights will be the cornerstone of future success.
FAQs
What are the key changes in tenant preferences for commercial real estate since the pandemic?
Since the pandemic, tenant priorities in commercial real estate have changed in noticeable ways. One of the biggest shifts is the demand for flexible lease terms. Businesses want the ability to adjust their space needs as circumstances evolve, making adaptability a key consideration.
Health and safety have also taken center stage. Features like improved ventilation systems, touchless technologies, and enhanced cleaning protocols are no longer optional - they’re expected. These additions help create safer environments for employees and clients alike.
Beyond safety, tenants are looking for spaces packed with amenities that promote collaboration and well-being. Think open layouts, outdoor spaces, and wellness facilities designed to boost morale and productivity. On top of that, proximity to public transportation and reliable high-speed internet are now deal-breakers for many businesses when choosing a location.
What are the benefits of investing in secondary and tertiary commercial real estate markets compared to major urban hubs?
Investing in secondary and tertiary markets comes with some compelling perks compared to the more traditional urban centers. One of the biggest draws? Lower property costs. For investors, this often means the chance to achieve better returns without breaking the bank. Plus, these markets usually have less competition, making it easier to land great deals and carve out a solid foothold.
What’s fueling the buzz around these areas? Rising demand. Population shifts, the rise of remote work, and businesses moving to more budget-friendly locations are all driving growth. While major cities still hold their place in the real estate world, secondary and tertiary markets offer a promising mix of growth opportunities and portfolio diversification for those ready to think beyond the usual hotspots.
How are real-time data and AI tools reshaping leasing strategies in commercial real estate?
Real-time data combined with AI tools is transforming leasing strategies in commercial real estate. These technologies help professionals dive deeper into tenant preferences, predict market trends, and make more precise, data-backed decisions. The result? Smarter operations and a more streamlined approach to leasing.
Take CoreCast, for example. This platform allows users to monitor leasing pipelines, assess portfolio performance, and map out competitive landscapes with ease. With upcoming features like AI-powered automation and enhanced reporting, tools like these are shaping the future of leasing - adapting strategies to meet the fast-changing demands of the market.