Commercial Real Estate Improving In First Quarter Part 1

By
Commercial Real Estate Agent with Tri State Properties BROK.0099563782-ACT

As stated by one of the United State's top commercial real estate experts, the commercial real estate market is improving, but just at a slower pace than usual. Even despite a recent change in the economy, along with an increase in job growth, the commercial fundamentals are still improving, just at a moderate pace in comparison to a year prior. Real Estate expert Lawrence Yun, the National Association of Realtors chief economist also stated, "Office demand is expected to see only slow and gradual improvement. Demand for retail space is benefiting from improved household wealth, while industrial real estate is stable with increasing international trade, which requires warehouse space. Of course, the apartment market fundamentals are the strongest, as nearly all of the new household formation in the past 10 years has come from renters, and not homeowners."

On a good note to the changes in our market, the national vacancy rates are predicted to diminish approximately .2 percent in office space, .1 percent in industrial and .3 percent in retail real estate. As new apartment construction projects are well under way, the multifamily vacancy rate is looking to increase .1 percent in comparison to the other sectors. With that being said though, the multifamily commercial real estate market has strongly been the highest in rent growth over the past few years and is slated to experience that same level again.

With the year already two months completed, NAR composed some statistics to better explain and demonstrate just where the office, industrial, retail and multifamily markets are heading.

Office Markets

During the first quarter alone, we are looking at office vacancy rates to decline from 15.8 percent to 15.6 percent in the first quarter of 2015. Even with the vacany rate still staying around the mid to up 15 percent, rents are being projected to rise up 2.3 percent and 3.2 percent in 2014 and 2015 respectively. The total net absorption of commercial real estate through office space is set to hit a staggering 44.6 million square feet in 2014 and rise even further to 50 million in 2015 alone. The numbers are strong and will continue to increase as the economy bounces back during this year and the next.

Industrial Markets

Over the course of the next year, we are likely to see industrial vacancy rates drop down a percentage point from 9 percent in the first quarter of 2014, to 8.9 percent in the first quarter of 2015. Just like the office markets, industrial commercial real estate is slated to increase in both rent and net absorption. Rent is likely to rise 2.4 percent in 2014 and 2.6 percent in 2015. A .2 percent increase prediction for 2015 will be great news for buyers in this particular market as prices will remain fairly stable. Net absorption on the other hand is set to be 106.1 million square feet in 2014 and 110.6 million in 2015. With these statistics set in place by the NAR commercial real estate sector, it looks as though our market is set to continually rise.

For information on the other two sectors, tune back in tomorrow to see how the retail and multifamily commercial real estate markets are set to do in 2014 and 2015 as well.

Posted by

Ryan Roark CCIM, is a licensed commercial real estate broker. If you are interested in commercial properties in Monroe, Louisiana you may contact him at 318-348-5815. His office is located at 1900 N. 18th Street, Suite 319, Monroe, LA. www.MonroeCommercial.com

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