Where Are We in the Cycle? Why It Matters More Than the Headlines
Commercial real estate moves through four recurring market cycles: recovery, expansion, hypersupply, and recession. Understanding which phase a market is in tells you more than any single headline about rent growth or vacancy.
Here is the pattern. In recovery, the market is digging out from oversupply. Vacancy is high, but demand is quietly absorbing the excess, and new construction has slowed to nearly nothing. Rents are flat or barely keeping pace with inflation. This phase is unglamorous, which is exactly why it is often the best time to buy.
Expansion follows once occupancy climbs past the market’s long-term average. Space gets tighter, rents accelerate, and eventually pricing gets attractive enough that developers start building again. Long expansions are common. The mistake investors make here is assuming the good numbers will keep compounding indefinitely.
Hypersupply is the quiet turn. Occupancy is still historically strong, often at its peak, so most participants do not notice the market has already turned. New supply is now growing faster than demand. Rent growth slows even though headline vacancy still looks healthy. This is the phase that catches people off guard, because the data everyone is watching, occupancy and rents, still looks good even as conditions are shifting underneath it.
Recession is where the correction plays out. Supply keeps arriving while demand stalls or reverses. Landlords compete on price to hold tenants, liquidity dries up, and the bid-ask spread between buyers and sellers widens until deals stop closing. It ends when new construction stops and demand catches back up.
A few things are worth remembering about this framework. First, every property type and every market moves on its own clock. Industrial, office, retail, multifamily, and hospitality do not cycle in sync, and neither do different metros. National averages can mask what is actually happening locally(See how today’s trends are playing out in our 2026 Spokane County Market Report). Second, markets do not always move forward smoothly. They can stall or reverse when demand or supply shifts faster than expected. Third, the long-term occupancy average, the level where rent growth equals inflation, is the real anchor. It tells you whether current rents are being driven by fundamentals or by momentum.
None of this is about timing the market perfectly. It is about knowing what phase you are operating in so your decisions, whether that is signing a lease, buying, selling, or holding, are grounded in where the cycle actually stands rather than where it feels like it stands.
If you are curious about where your property sits right now, and what that means for your next move, reach out and let’s have that conversation.
Omar Sadaoui, CCIM, is a licensed commercial real estate broker in Washington and Idaho specializing in industrial properties across Eastern Washington and North Idaho. He works with owners and occupiers to evaluate and position assets for long-term success. To get in touch with Omar, email omar.sadaoui@svn.com or call 509.601.0695