Lawrence Yun, NAR (National Association of Realtors) chief economist reports vacancy rate improvements across all commercial real estate sectors.
NAR forecasts commercial vacancy rates over the next year to decline 0.4 percent in the office sector, 0.8 percent in industrial real estate, 0.9 percent in retail and 0.2 percent in the multifamily sector.
Office vacancy rates are projected to fall from 16.4 percent in the current quarter to 16 percent in the first quarter of 2013. The markets with the lowest office vacancy rates currently are Washington, DC, at 9.5 percent, New York City at 10 percent and New Orleans at 12.4 percent.
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013. The areas with the lowest industrial vacancy rates currently are Orange County, California at 4.8 percent, Los Angeles at 4.9 percent and Miami at 7.6 percent.
Retail vacancy rates are predicted to decline from 11.9 percent in the current quarter to 11 percent in the first quarter of 2013. The markets with the lowest retail vacancy rates today include San Francisco at 3.6 percent, Fairfield County, Connecticut, at 5.1 percent and Long Island, New York, at 5.4 percent.
Multifamily housing is likely to see vacancy rates drop from 4.7 percent in the first quarter of 2012 to 4.5 percent in the first quarter of 2013. Vacancy rates in the multifamily sector below 5 percent are generally are considered a landlord’s market with demand justifying higher rents. Areas with the lowest multifamily vacancy rates currently are New York City at 1.8 percent, Minneapolis and Portland, Oregon, both at 2.5 percent, and San Jose, California at 2.7 percent.
The SIOR (Society of Industrial and Office Realtors) Commercial Real Estate Index – an attitudinal survey of 297 local market experts measuring the impact of ten variables, rose 8.3 percent to 63.8 in the fourth quarter of 2011, following a gain of 0.6 percent in the third quarter. However, the index remains below the level of 100, which represents a balanced marketplace, last seen in the third quarter of 2007.
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