The National Association of Realtors’ (NAR) quarterly commercial real estate forecast predicts a gradual increase in demand in the US commercial market over the next year.
National office vacancy rates are expected to decrease slightly (0.1 per cent) as the demand for office space gradually improves.
Industrial vacancy rates will likely follow suit, declining by 0.3 per cent. Retail space will also see a dip of 0.4 per cent as manufacturing output gets a boost; low gas prices and slight gains in income will lead to consumers opening their wallets.
Lawrence Yun, NAR’s chief economist, commented recently that the commercial real estate sector is “on the path to recovery” but factors such as lack of financing available to small investors, sub-par economic growth and the current business trend of squeezing more employees into existing spaces will serve to keep demand from accelerating meaningfully.
Office vacancy rates are projected to decline from 15.6 per cent in Q2 of 2015 to 15.5 per cent of Q2 of 2016. The markets with lowest vacancy rates in the second quarter are:
Industrial vacancy rates are likely to drop from 8.4 per cent in Q2 to 8.1 per cent in Q2 of 2016. Areas with the lowest industrial vacancy rates currently are as follows:
Vacancy rates in the retail markets are predicted to drop from their current rate of 9.6 per cent to 9.2 per cent in the second quarter of 2016. Markets with the lowest retail vacancy rates are:
As long as jobs are being added at a “respectable pace,” the demand for commercial real estate should increase gradually, the forecast concludes.
