The real estate market in the U.S. provides an insight into the health of that country’s economy and, according to Lawrence Yun the chief economist for the National Association of Realtors, the fundamentals are on an upward curve.
Growth is continuing at a moderate pace but from a low starting point. Consequently, despite job growth, companies are hesitant to add new space at this point.
Office demand is currently expected to see only a slow, gradual improvement, according to Mr. Yun. Demand for retail space it benefitting from an increased level of household wealth, and industrial real estate is stable due to increasing international trade.
Vacancy rates in the U.S. for office space are expected to decline by approximately 0.2 per cent, 0.1 per cent in the industrial category and 0.3 percent in the retail sector. According to the National Association of Realtors quarterly commercial real estate forecast, overall projections are as follows:
Vacancy rates in the office market are expected to decline from 15.8 per cent in the first three months of the year to 15.6 per cent in the first quarter of 2015. The markets with the lowest vacancy rates in Q1 are:
New York City 9.5 per cent
Washington D.C. 10.2 per cent
Little Rock, Ark. 11.6 per cent
Birmingham, Ala. 12.7 per cent
San Francisco 12.8 per cent
Nashville, Tenn. 12.8 per cent
Industrial vacancy rates are anticipated to fall from 9.0 per cent in Q1 to 8.9 per cent in the same period in 2015. The areas with the lowest industrial vacancy rates are
Orange County, Calif 3.7 per cent
Los Angeles 3.8 per cent
Miami 5.8 per cent
Seattle 5.9 per cent
San Riverdale/Bernardino 6.1 per cent
Retail vacancy rates are also expected to decline from 10.2 per cent in the first quarter of this year to 9.9 per cent in Q1 next year. The tightest markets in the country include
San Francisco 3.1 per cent
Fairfield County, Conn 3.8 per cent
Long Island, N.Y. 4.8 per cent
San Jose, Calif. 5.2 per cent
Northern New Jersey 5.3 per cent
Orange County, Calif. 5.3 per cent
These forecasts represent a steady, rather than spectacular improvement in line with the slowly improving economy.
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