Dive Brief:
- An expanding workforce and the formation of more households is behind the forecast for a moderate gain in the commercial real estate market.
- The National Association of Realtors predicts the national office vacancy rate will decrease 0.1% over the year as office space demand improves. The industrial space vacancy rate is likely to decline 0.3% and retail space 0.4% due to an increase in manufacturing, lower gas prices and a bump in consumer spending. On the other hand, new apartment construction is expected to bring the multifamily vacancy rate up 0.1%.
- The economy, still shaking off the effects of a damaging winter, is expected to rebound, but likely not to the same heights as 2014, the NAR said.
Dive Insight:
"The commercial real estate sector is on the path to recovery, but subpar economic growth, lack of financing available to small investors and the industry trend towards squeezing more employees into existing spaces will keep demand from meaningful acceleration," Lawrence Yun, NAR chief economist said. "The exception is multifamily housing, which remains the best performer with vacancy rates under 4 percent in several markets in the Northeast and in California."
The NAR report coincides with a similar forecast from the Urban Land Institute released last week, which found commercial real estate transactions have increased every year since 2010 and are expected to continue rising through 2017.