April 19, 2018

Commercial Sector to Face Tighter Availability

-A A +A

Commercial Sector to Face Tighter Availability

Rising employment has fueled demand for commercial space across all property types in recent months, according to the National Association of REALTORS®' latest Commercial Real Estate Outlook. Vacancies continued to drop in the fourth quarter of 2015 and rising rents gave a boost to cash flows, the report reveals.

Read more: The Delicate Art of Rent Increases

"Commercial fundamentals are expected to improve, with vacancies continuing on a downward trend," NAR's report notes. 

According to NAR, here's the outlook for the four main commercial sectors with vacancies:

  • Office: Employment gains will help drive vacancies down to 13.4 percent by the fourth quarter of 2016 and further decline to 12.7 percent by 2017. 
  • Industrial: Vacancies are expected to drop from an 11.4 percent average in 2015 to 10.6 percent in 2016.
  • Retail: Vacancies are continuing to be more limited, having dropped to 12.9 percent in 2015 and expected to drop further in 2016 to 12.2 percent.
  • Multifamily: Vacancies are expected to reach 6.5 percent by the end of 2016, with the sector buoyed by new supply.

Overall, economic growth is expected to pick up in the second half of 2016, with payroll employment likely to show an increase and unemployment rates expected to fall to 4.8 percent by the end of the year, according to NAR's report. 

Download the full report. 

Source: National Association of REALTORS®