We have seen continued strength in the multifamily sector as well as expanding demand in industrial and office space requirements in select markets.
San Francisco, CA (PRWEB) March 19, 2013
As the U.S. economy gradually improves and employers begin adding more employees to the workforce, commercial real estate is seeing a downward trend in vacancy rates according to data released by the National Association of Realtors (NAR) in their quarterly commercial real estate forecast.
“Overall commercial real estate leasing activity continued to grow in most markets during the closing months of 2012, which is modestly lowering vacancy rates in all of the commercial sectors early this year,” according to Lawrence Yun, NAR’s chief economist.
Terry Robinson, president of the Off Market Association commented on statement, “We have seen continued strength in the multifamily sector as well as expanding demand in industrial and office space requirements in select markets. Vacancy rates should return to historical averages by the end of next year.”
The NAR forecast calls for declines in vacancy rates in the multifamily sector of 0.1 percent this year. The sector is already experiencing the tightest availability of all the commercial real estate sectors. Current vacancy rates are 4.0 percent, declining to 3.9 percent by the first quarter of 2014. Vacancy rates below 5 percent in the multifamily sector are considered to be a landlord’s market.
The falling vacancy rates have also impacted rental rates in the multifamily sector. In markets where there is little to no new construction and increasing demand, tight availability is allowing landlords to raise rents more quickly. Rental rates in the multifamily sector rose by 4.1 percent in 2012 and are expected to accelerate their increase by 4.6 percent in 2013 and 4.7 percent in 2014.
"We have noted that apartment rents are increasing with many of the assets we handle off market", said Robinson, "and strong interest is apparent among both buyers and sellers. Our Small Balance Multifamily Group continues to increase."
NAR also projects that vacancy rates in the industrial sector will drop from 9.6 percent currently to 9.2 percent by this time next year. Rental rates in the industrial sector are also projected to increase by 2.3 percent in 2013.
Retail vacancy rates are expected to drop from 10.7 percent to 10.4 in the coming 12 months, while rents are expected to increase by 1.5 percent in 2013 and 2.1 percent in 2014 as consumer spending recovers.
The office sector has been the worst performing sector in commercial real estate, but it is also projected to see a drop in vacancy rates in 2013. NAR projects that the vacancy rate will drop from a current 16.0 percent to 15.6 percent by the end of the year. Rental rates are also expected to increase by 2.6 percent this year and by 2.8 percent in 2014.
About The Off Market Association
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