The National Association of Realtors' Commercial Real Estate Outlook, NAR, reported today that the commercial real estate market is recovering slowly, according to AGBeat.
The commercial real estate sector is improving primarily because of the residual improvement in job creation and economy in the few years after the big crisis. This is what's driving the sector, the association addressed.
Earlier in the month, AGBeat reported the CoStar Commercial Repeat Sale Indices, CCRSI, indicated that 2012 year ended with successful gains in sales and with pricing recovery in both multifamily and other sales.
In 2012, the Index hit $64 billion, which was a 22 percent increase from the previous year. And as December loomed around the corner, investors sought to push sales. Fueling to the current investment and purchasing climate, are the investors particularly interested in Real Estate Investment Trusts, REIT, because they're seemingly in better shape than before and properties could be purchased at a bargain.
"Rent increases have been higher in multifamily housing where supply is not matching strong demand, thereby allowing landlords to raise rents at faster rates," said Dr. Lawrence Yun, NAR's chief economist, in an interview with AGBeat. "Overall commercial real estate leasing activity continued to grow in most markets during the closing months of 2012, which is modestly lowering vacancy rates in all of the commercial sectors early this year."
The NAR's Outlook also predict that the national vacancy rates will decline for the office real estate market by 0.4 percent. For retail, expect to see a 0.3 point drop and 0.1 drop for the multifamily market.
The retail sector can see a vacancy rate drop from 10.7 percent from the first quarter of this year to 10.4 percent in the first quarter of next year. Landlords can are expecting the multifamily market rents to increase from 4.6 percent to 4.7 percent between this year and next year.
"The economy is expected to grow 2.5 percent [in 2013]," Dr. Yun told AGBeat, "and with modest job creation, assuming there is no fiscal cliff, the demand for commercial space will gradually rise. The greatest friction that remains is a tight credit environment, notably for smaller properties."