At the end of May 2012, a report from the National Association of Realtors (NAR) concluded that the country’s major commercial real estate sectors are all showing signs of improvement. It was also noted that the apartment market is completely back on its feet and expanding. The average price of rent has also increased which has spurred more home sales.
For the NAR’s recent quarterly survey, they enlisted the help of the information-gathering agency, REIS, INC. The report offers projections for four commercial sectors plus analyzes the most current data for the office, industrial, retail, and multifamily markets.
Their data predicts that the Office Markets Vacancy rates will drop from the current rate of 16.3% to 16.0% by 2013’s second quarter. The firm also stated that the markets with the lowest office vacancy rates were Washington, DC at 9.3%, NYC at 10.0% and New Orleans, whose rate was 12.6%.
For the industrial market, rates are expected to drop to 10.7% by the second quarter of 2013 from their current figure of 11.0%. Orange County, CA had the lowest number of industrial vacancies, which translated to 4.7%. Next was Los Angeles with 5.0% and Miami was in better shape than in previous months at 7.2%.
The NAR’s report also projects that the retail inventory will decline by early 2013 from 11.3% to 10.7%. The healthiest retail markets, or locations with lower inventory rates were San Francisco, 3.7%, Fairfield County, CT at 4.0% and Long Island, NY with 5.0%.
The multifamily and apartment market were already considered a landlord’s market, due to vacancy rates of less than 5%. They are expected to go even lower, from May’s 4.5% to 4.3% after the new year. The NYC, Portland, and Minneapolis multifamily markets had vacancy rates under 2.5%
Rental rates across the board are rising as vacancy rates in all four sectors decrease. Prices are also expected to continue their slow climb, except in one pocket of the commercial market. A stall out is taking place for properties priced less than 2.5 million. Smaller business owners and developers are finding that funding for smaller interests is harder to come by.
The NAR’s chief economist, Lawrence Yun feels that the creation of new jobs and thereby a greater need for commercial space is the answer to eliminating any surpluses in the commercial market.