- 1 Minute Read
- 27th August 2013
Multifamily Sector Leads Way for Commercial Real Estate Growth
The multifamily sector continues to lead the way in the recent resurgence of commercial real estate, the National Association of Realtors (NAR) have said.
With all four sectors of commercial real estate experiencing growth, the rate of the multifamily sector has been greater than the other three (office, industrial, and retail).
The sector has been subject to low vacancy rates in recent reviews, with demand supporting rapid rent increases - a trend likely to continue.
The Association's quarterly commercial real estate forecast sees a total drop in vacancy rates for commercial property, by 0.2 per cent, over the next year. Office vacancy rates have failed to decrease, though retail and industrial are experiencing a decrease of up to 0.6 per cent.
Lawrence Yun, NAR chief economist said, "Office vacancies haven't declined much because total jobs today are still below that of the pre-recession level in 2007, but rising international trade is boosting demand for warehouse space. Consumer spending has been favorable for the retail market, and rising construction is keeping apartment availability fairly even, though at low vacancy levels. That, in turn, is pushing apartment rents to rise twice as fast as broad consumer prices and average wage growth."
A decline in vacancy rates in the office sector is projected by the third quarter of 2014 - a decrease of 0.2 per cent from 15.7 to 15.5. Rents for office space are expected to increase about 2.5 percent in 2013 and 2.8 percent in 2014.
Currently the best markets for office space are Washington, D.C., with a vacancy rate of 9.7 percent; New York City, at 9.8 percent; Little Rock., 12.1 percent; and Birmingham, 12.4 percent.