All of the major commercial real estate sectors are seeing improved fundamentals, but multifamily housing is becoming a landlord's market commanding bigger rent increases, according to the latest results of survey of the National Association of Realtors(NAR). The results are in accordance with the forecast.
Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. "Sustained job creation is benefiting commercial real estate sectors by increasing demand for space," he said. "Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest."
NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.
"Household formation appears to be rising from pent-up demand," Yun said. "The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term."
What's more, NAR's latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.