Dive Brief:
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Activity in the commercial real estate sector is likely to remain level through the spring, the National Association of Realtors predicted last week.
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Cheaper gas prices and higher salaries—the result of a tight labor market—have led businesses to increase their payrolls and demand more office space, according to the NAR’s quarterly commercial real estate forecast. In fact, office vacancy rates all over the country are expected to decrease slightly over the coming year, the report said.
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Still, growth in the industry is stifled somewhat by weaknesses in foreign economies, which NAR Chief Economist Lawrence Yun said will “widen the trade deficit and slow economic growth potential.”
Dive Insight:
As construction of apartment buildings continues at a fever pitch, supply may be starting to outpace demand. The NAR report forecast a slight increase—0.1%—in the multifamily vacancy rate this year, and a jump from the current 4.1% vacancy rate to 4.3% by this time next year.
Still, vacancy rates below 5% indicate strong demand and signal that rents will continue to rise.