**International Private Investment: A Brief Guide to the U.S. Commercial Real Estate Market in 2025**

Investing in commercial real estate in the United States represents a strategically important direction for global investors. Amid high market volatility and shifting office space demand, commercial real estate requires in-depth analysis based on updated statistics and regional specifics. This study compiles key data as of late 2024 and early 2025, broken down by segments, regions, and risk levels.

Average Price and Rental Rates by Region

According to Commercial Edge, the average office rental rate in the U.S. is $37.80 per square foot, equivalent to approximately $406.95 per square meter. However, regional disparities are substantial:

San Francisco (California): $69.14/sq.ft (~$744.16/sq.m) – the highest rate in the country.
Manhattan (New York): $68.48/sq.ft (~$737.20/sq.m).
Los Angeles (California): $41.28/sq.ft (~$444.34/sq.m).
Chicago (Illinois): $29.16/sq.ft (~$313.78/sq.m).
Detroit (Michigan): $21.46/sq.ft (~$231.01/sq.m) – the lowest among major markets.

Additionally, rates in smaller markets such as Portland, Atlanta, Charlotte, Columbus, and Pittsburgh range from $22 to $32 per sq. ft (~$237–344/sq.m), depending on building class and location.

State-by-State Trends

Vermont: +12.80%
New Jersey: +11.58%
New York: +10.87%
Connecticut: +10.12%
Rhode Island: +9.85%

Source: Jagran Josh

Southern states like Texas, Georgia, and Florida have shown moderate growth of 5–7%, reflecting steady demand in densely populated and migration-attractive regions.

Rental Yields and Vacancy Rates

Rental yield (cap rate) varies:

New York (premium): ~4.5%
Chicago (mid-tier): 5.8–6.5%
Detroit and Cleveland (budget): 7.5–8.5%

At the same time:

San Francisco: vacancy rate – 27.7%
Seattle: 25.8%
Detroit: 22.5%
Houston: 29.1%
Dallas: 28.4%

This indicates declining demand for traditional offices, especially in tech hubs following a massive shift to remote work. Investors should account for longer marketing periods and potential costs for repositioning buildings as mixed-use or coworking spaces.



Construction Volume

Boston (Massachusetts): 10.7 million sq.ft (~994k sq.m) – 4.3% of existing stock
Austin (Texas): 3.5 million sq.ft (~325k sq.m) – 3.7%
Detroit (Michigan): 524k sq.ft (~48.7k sq.m) – 0.4%
Miami (Florida): about 1.2 million sq.ft (~111.5k sq.m) – mostly mixed-use projects

Supply and Demand Balance

Phoenix (Arizona), Austin (Texas), Nashville (Tennessee) – markets with positive demand trends in commercial real estate.

Meanwhile, vacancy rates exceed 29% in Dallas and Houston (CBRE, Resimpli), indicating an oversupply, especially in B- and C-class properties.

Markets with supply shortages:

Charlotte (North Carolina)
Salt Lake City (Utah)
Boulder (Colorado)

Segmentation by Class and Type

Economy (Class C):
- Outdated buildings in suburban areas
- Low rates ($15–22/sq.ft | $161–237/sq.m)
- Most assets require capital repairs
- High returns when purchased at a discount and modernized

Mid-tier (Class B):
- Properties 10–20 years old, located outside CBDs
- Rates: $25–35/sq.ft ($269–377/sq.m)
- Stable demand at reasonable pricing

Premium (Class A):
- New or renovated buildings with LEED certification
- Located in metropolitan hubs, high-tech infrastructure
- Rates: $50–75/sq.ft ($538–807/sq.m)

Branded real estate:
- Leased by tenants like Google, Amazon, JPMorgan, Apple
- Most liquid class
- Low risks, minimal vacancy, long-term lease contracts

There is also a growing sector of flex-office and mixed-use developments, particularly in Denver, Atlanta, and Chicago.

Below is a summary by key states based on data available as of late 2024 and early 2025.

California
- San Francisco: Average office rent is $69.14/sq.ft (~$744.16/sq.m). Vacancy rate at 27.7%, indicating declining demand in this tech center.
- Los Angeles: Rental rates around $41.28/sq.ft (~$444.34/sq.m).

New York
- Manhattan: Average rent is $68.48/sq.ft (~$737.20/sq.m). Despite a 21% vacancy rate, it remains attractive to investors with $1.8 billion in sales in early 2025.

Texas
- Austin: Active office development totaling 3.5 million sq.ft (~325k sq.m), representing 3.7% of existing stock.
- Dallas and Houston: Vacancy rates above 29%, indicating an oversupplied office market.

Massachusetts
- Boston: Leads the nation in office development with 10.7 million sq.ft (~994k sq.m) under construction, or 4.3% of existing stock.

Florida
- Miami: Low vacancy in office space, making it attractive to investors.



Illinois
- Chicago: Average rent is $29.16/sq.ft (~$313.78/sq.m). The city launched a $150 million subsidy program to convert vacant office buildings into residential spaces to revitalize downtown, reports New York Post.

Arizona
- Phoenix: Market with demand outpacing supply, especially in industrial and multifamily sectors, writes Building Radar.

Michigan
- Detroit: Lowest rental rate among major markets – $21.46/sq.ft (~$231.01/sq.m). Vacancy rate stands at 22.5%.

Tennessee
- Nashville: Demand outpaces supply, especially in industrial and multifamily segments.

Ohio
- Columbus: Average office rental rates around $22–32/sq.ft (~$237–344/sq.m), depending on building class and location.

Georgia
- Atlanta: Office rental rates range from $22 to $32/sq.ft (~$237–344/sq.m).

North Carolina
- Charlotte: Supply-constrained market, particularly in industrial and multifamily real estate.

Utah
- Salt Lake City: Supply-constrained market, especially in industrial and multifamily sectors.

Colorado
- Boulder: Supply-constrained market, especially in industrial and multifamily segments.

Missouri
- St. Louis: Morgan Properties acquired 11 multifamily properties across the Midwest, including St. Louis, for $501 million, highlighting strategic investment in a housing-constrained region, according to The Wall Street Journal.

Data for other states may be limited or unavailable from current sources. For the most accurate and up-to-date information, consult local brokers, analytical reports, and official statistics of each specific state.

Investment Attractiveness and Risks

Advantages:
- Steady demand for industrial and residential assets
- Geographic diversification reduces risk
- Opportunity to buy discounted assets on the secondary market

Risks:
- High vacancy in the office segment (especially Class B and C)
- Renovation risks, CAPEX
- Interest rate volatility (Fed impact)
- Oversaturation in fast-growing southern markets

Conclusion

U.S. commercial real estate remains attractive for investment, provided there is regional diversification and focus on liquid and growing segments. The highest growth potential lies in markets with active construction and strong demand for industrial and mixed-use residential complexes. At the same time, the office segment requires a cautious approach, especially amid the post-pandemic transformation of work formats. Investors should prioritize sustainable rental flows, environmentally certified buildings, and assets adaptable to hybrid usage models.