Friday, July 6, 2012

Commercial Real Estate Improving


Improving from the impact of the recession, the main aspects of the major commercial real estate sectors are greatly improving, according to the national association of realtors quarterly commercial real estate forecast.

Lawrence Yun NAR chief economist said new jobs are the key. "Ongoing job creation, which is at a higher level this year, is fueling an underlying demand for commercial real estate space, assisted by a steady increase in consumer spending," he said. "The pattern shows gradually declining commercial vacancy rates, with consequential but generally modest rent growth."

There is still a problem for small business trying to purchase commercial property. With the commercial property vacancies dropping and prices rising, it is more difficult for small businesses to purchase commercial properties, leaving commercial property owners to look more towards the bigger businesses for potential property sales.

In the office markets vacancy rates are expected to drop from 16.3% in the second quarter of 2012 to 16.0% in the second quarter of 2013.

Office rents are expected to rise 2.0% this year and 2.5% by next year.

California Vacancy Rates
CITY
OFFICE
INDUSTRIAL
RETAIL
MULTIFAMILY
Los Angeles
15.0
5.0
6.4
3.4
Oakland-East Bay
18.3
11.1
6.2
2.8
Orange County
19.3
4.7
5.6
3.5
Sacramento
19.6
13.7
11.8
3.7
San Bernardino/Riverside
24.4
8.6
10.7
4.0
San Diego
17.5
8.7
6.4
2.7
San Francisco
13.9
12.6
3.7
2.8
Source: NAR, REIS, Inc.

NCREIF PROPERTY INDEX RETURNS – 2012.Q1

NATIONAL
2.59%
OFFICE
2.34%
INDUSTRIAL
2.70%
RETAIL
2.81%
APARTMENT
2.79%
Source: National Council of Real Estate Investment Fiduciaries



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