Upstate retail space adapting to changing market
August 30, 2012ULI Survey Scales Back Commercial Real Estate Predictions
September 27, 2012By Anna Spiewak, News Editor
Commercial real estate will continue moving in an upward trajectory for the next few months, but at a sluggish pace, mainly due to meek job creation and tight loan underwriting, according to the National Association of Realtors’ quarterly commercial real estate forecast.
“With the general slowdown in national economic conditions, and especially weak employment trends, commercial real estate is following the broader trends,” George Ratiu, NAR’s manager of quantitative and commercial research, told Commercial Property Executive. “Since demand for office and retail spaces is directly correlated to employment data, lack of new jobs translates into less absorption of space, accompanied by softer rent growth and lingering vacancies.”
According to the NAR forecast, the commercial sectors are showing mixed results. Vacancy is shrinking marginally and rents are rising modestly in all sectors, but significant changes in the outlook are unlikely before the end of the year. Demand for office space is stalling because of slowing job creation, which fell by half from the first quarter to the second quarter. Net absorption will slow in the office sector from 7.6 million square feet in the third quarter to 6.3 million square feet in the fourth quarter, before picking up momentum again in early 2013. By the third quarter next year, absorption, Ratiu predicts, will reach 16.3 million square feet.
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