The commercial real estate sector in the US has been impacted by the country's low level of economic growth, the National Association of Realtors (NAR) has warned. The organisation moderated its predictions for the coming months due to the slowdown in the economy and poor job creation figures. Lawrence Yun, NAR chief economist, stated that the majority of commercial real estate asset classes are set to experience low growth over the coming year.
However, he pointed out that multifamily housing is bucking the trend, due to "pent-up demand resulting from an abnormal slowdown in household formation in recent years". Mr Yun explained that many young people who would usually set up their own homes have been staying with parents or other friends over the past few years. But this year, "they've been entering the market in stronger numbers," he revealed. Consequently, apartment rents in the US are rising, while vacancy rates are dropping.
"A healthy recovery is already occurring in the multifamily sector, with the average apartment rent expected to rise 2.5 per cent this year and another 3.2 per cent in 2012," Mr Yun noted. The office market is also expected to see an improvement over the coming year, with falling vacancy rates combining with rising rents. But the picture is different for the industrial and retail sectors, where rents are predicted to fall despite an anticipated reduction in the amount of empty space on the market.
Earlier this month, figures published by CB Richard Ellis (CBRE) indicated that the global commercial real estate market is on the road to recovery. According to the firm, capital values grew by an average of 15.2 per cent worldwide during the second quarter of the year, compared to the same time a year earlier. The performance is being driven by the Asia-Pacific region; however, the Americas registered a 12.7 per cent rise in capital values over the same period.
- Tuesday 30 August 2011