U.S. property market growth remained sluggish in the second quarter of 2013 with rents climbing little and vacancy rates remaining stagnant. The slow growth is due to lack of improvement in the government employment sector of the country, according to several media reports.
Rents grew 0.4 percent from the figures recorded in the past three months but were however 0.3 percent lesser than the growth recorded in the same period in 2012. The vacancy rate stood high and still at 17 percent. Vacancy rates have changed little since 2009. Before the financial crisis hit the country, rates were around 13.2 percent. However, they climbed to 17.6 percent in 2009 and have inched down just 0.6 percent since then, reports Bloomberg.
Demand for office space also remained low despite the job markets showing small improvements. Even though the hiring activity saw some strength, many banks, companies and law firms have been cutting jobs.
"The jobs we're generating are not the kind that really move the needle in the office market. We're generating education jobs, healthcare jobs, retail jobs and construction jobs - that's great, but they're not the kind of sectors we need to improve the office market," Ryan Severino, senior economist and associate director of research at Reis Inc, a real estate intelligence firm said in an interview with Reuters.
However, demand from tech and energy sectors has been strong, especially in cities like San Francisco, San Jose and New York City. Many companies of the aforementioned sectors are seeking large leases to make room for their rising headcount. Economists are therefore positive about the conditions and believe that the market is growing slowly, but steadily- which is sign of sustainable growth.
"The market feels steady and strong, and healthy. There's still a lot of great companies being created in San Francisco that are growing and driving demand," J.D. Lumpkin, a commercial leasing broker at Cushman & Wakefield Inc. said to The Wall Street Journal.
Job growth in the private sector mapped a steady upward graph with the segment adding 202,000 new jobs in June. However, the public sector shed 7000 jobs due to the spending cuts.
On the whole, the market and the economy are improving. The job growth has exceeded expectations and so has the property market. Experts are positive about the future of the market claim that the market is "growing faster than we thought".
