Growth In Commercial Real Estate Markets Expected in 2012

Growth

While leasing, construction and vacancy rates appear more or less flat, leading economic indicators are looking up and expected to bring the commercial markets along in 2012. That’s the upshot of NAR’s latest Commercial Real Estate Outlook along with SIOR’s Commercial Real Estate Index.

NAR Chief Economist Lawrence Yun:  “Vacancy rates are expected to trend lower and rents should rise modestly next year. In the multifamily market, which already has the tightest vacancy rates in any commercial sector, apartment rents will be rising at faster rates in most of the country next year. If new multifamily construction doesn’t ramp up, rent growth could potentially approach 7 percent over the next two years.”

Looking at commercial vacancy rates from the fourth quarter of this year to the fourth quarter of 2012, NAR forecasts vacancies to decline 0.6 percentage point in the office sector, 0.4 point in industrial real estate, 0.8 point in the retail sector and 0.7 percentage point in the multifamily rental market.

The Society of Industrial and Office Realtors®, in its SIOR Commercial Real Estate Index, an attitudinal survey of 231 local market experts,1 shows the broad industrial and office markets were relatively flat in the third quarter, in step with macroeconomic trends. The national economy continues to affect the sectors, with 92 percent of respondents reporting the economy is having a negative impact on their local market.

Even so, the SIOR index, measuring the impact of 10 variables, rose 0.6 percentage point to 55.5 in the third quarter, following a decline of 2.6 percentage points in the second quarter. In a split from the recent past, the industrial sector advanced while the office sector declined.

The next commercial real estate forecast and quarterly market report will be released on February 24.

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About Wayne Grohl

Wayne enjoys shelter, food and commercial real estate.

28. November 2011 by Wayne Grohl
Categories: Future Trends, NAR Forecast, NAR Research | Tags: , , , | 2 comments

Comments (2)

  1. Multi-family will continue to be the bright spot for commercial real estate in 2012. With the continuing accelerated demand driving down cap rates, hopefully another bubble isn’t being created in this sector for beyond 2012.

    Vacancy rates and rent growth for the remaining property sectors (office, retail, industrial) will probably remain relatively flat until unemployment starts to fall.

  2. This is great news for the Commercial Real Estate Industry. Especially for Demetree Real Estate since we specialize in Commercial Real Estate in Orlando. We are very excited and look forward to 2012.

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