Commercial real estate markets are flattening out, with modestly improving fundamentals expected in 2011, NAR says. ‘œThe basic fundamental of rising commercial leasing demand, resulting from a steadily improving economy, means overall vacancy rates have already peaked or will soon top out,’ says NAR Chief Economist Lawrence Yun. ‘œThe outlook for the office and industrial markets has moderated with modestly declining vacancy rates expected as 2011 progresses, while the retail sector should hold fairly steady. Still, high vacancy rates imply falling rents.’ Yun anticipates a rise in household formation from an improving economy, which will increase demand for housing, both ownership and rental.
vacancy rates
Commercial Vacancies to Peak Near Early 2011
Vacancy rates continue to rise in most commercial sectors and are not expected to level out in most markets until the end of this year or early 2011, according to the National Association of REALTORS®. Read more…
Where Have All the Optimists Gone?
Steve Brown, Dallas Morning News columnist doesn’t think this downturn is as bad as the 80’s. He acknowledges that it’s bad, but says there hasn’t been as much overbuilding in his region, and he compares the 22.5 percent office building vacancy rate of last year with 1987 when vacancy rates hit 34 percent.
Commercial Market Improvement Will Come Slowly
NAR Chief Economist, Dr Lawrence Yun, predicts high vacancy rates and ubiquitous commercial rent concessions. Slight employment improvements will help absorption rates for office/warehouse space, and SIOR’s (Society of Industrial and Office Realtors) recent survey confirms the forecast of easing in this sector. More than half the members of SIOR® expect an improvement in Q2 2010. Rents are down for Office, Industrial, Retail and Multifamily, but not by as much as in Q4 -2009, and the trends are improving slightly. To read the February Commercial Forecast and table on specifics of four commercial sectors. Read more…
COMMERCIAL PROPERTY VALUE CONUNDRUM – AN OPPORTUNITY
The impact of reduced property values has meant limited refinancing capacity and lending on new purchases will continue to put pressure on commercial real estate values. Yet, with significant equity, it’s simply the best buying opportunity for commercial real estate since 1988/89. Fortunes will be made by some in this market and it’s also a time for property owners to vigorously appeal property taxes. Read more…
