Most major US commercial markets are showing signs of slow improvement according to the National Association of Realtors’ quarterly commercial real estate forecast.
The market is currently building momentum, and the increased demand is directly related to job creation numbers. The U.S. economy is expected to grow by 2.5 per cent in 2013, and this positive indication, coupled with modest job creation, should translate into a gradual rise in demand for commercial space. However this will be hampered by a tight credit market which will slow growth, especially for smaller properties.
Office rents are expected to rise by 2.5% in 2013
Over the next 12 months, vacancy rates are expected to decline a full percentage point in the office market. Retail space is predicted to follow suit by 0.2 per cent.
According to the Commercial Real Estate Outlook, vacancy rates in the office sector will drop from 16.7 per cent in the 12 months from the fourth quarter of 2012 to the fourth quarter of 2013. Washington, D.C. currently has the lowest vacancy rate in the country at 9.6 per cent, followed by New York City at 10.1 per cent and New Orleans at 12.9 per cent.
Office rents are expected to increase by 2.0 per cent in 2012 and 2.5 per cent next year. Net absorption of office space nationwide, which includes leasing of new space becoming available on the market and space in existing properties, will amount to 21.7 million square feet this year and 49.0 million in 2013.
Industrial vacancy rates are likely to decline from their current levels of 10.1 per cent to 9.5 per cent by the fourth quarter of 2013. Orange County has the lowest industrial vacancy rate in the nation at 4.3 per cent. Los Angeles is a close second at 4.4 per cent and Miami is third at 6.5 per cent.
Rents for industrial space will rise by 1.7 per cent in 2012 and 2.2 per cent in 2013. The net absorption will total 93.4 million square feet this year and 89.6 million in the next 12 months.
Vacancy rates in the retail sector will decrease from 10.8 per cent to 10.6 per cent over the next 12 months. San Francisco and Fairfield County share the honour of having the lowest vacancy rates in the country at 3.9 per cent. Long Island follows at 5.1 per cent, and Orange County has a vacancy rate of 5.4 per cent.
Previous Post
Race to Save Twinkies
