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Higher interest rates and inflation are having a mixed impact on the demand for commercial real estate. The pace of absorption has slowed in the industrial and retail markets as consumers cut back on spending amid high inflation. Meanwhile higher mortgage rates and continuing return of workers to the office have increased the pace of absorption of multifamily units and office space.
As rising mortgage rates make a home purchase less affordable, occupancy of multifamily units in the past three months as of May 2022 rose to about 75,600 units, an increase from 62,000 units in 2022 Q1.