WASHINGTON, DC—User demand for commercial space, which nationwide has been on a gradual upward climb, is expected to continue on that same path for the balance of 2015, the National Association of Realtors said Tuesday. A sluggish economy has put on a damper on more accelerated growth, NAR says in its quarterly Commercial Real Estate Outlook report.

“The commercial real estate sector is on the path to recovery, but subpar economic growth, lack of financing available to small investors and the industry trend towards squeezing more employees into existing spaces will keep demand from meaningful acceleration,” says Lawrence Yun, chief economist at NAR. The major exception, he adds, is multifamily, “with vacancy rates under 4% in several markets in the Northeast and in California.”

In the office sector, NAR expects vacancies to decline by 0.1% nationally over the next 12 months as demand slowly increases. The outlook is a bit brighter for industrial and retail space, with the association projecting vacancy drops of 0.3% and 0.4%, respectively. Thanks to unexpectedly heavy volume of new construction, apartment vacancy is predicted to rise by 0.1% over the coming year.

The projected increases are a little steeper when it comes to asking rents. NAR is forecasting office rents to increase 3.4% this year and 3.7% in 2016, industrial rents to rise by 3.1% in both years, retail to see a 2.6% increase this year and 3.1% next year and multifamily rent growth to taper off from 3.6% this year to 3.3% in '16 as more apartment units come on line.

On a macroeconomic basis, Yun sees a gradual pickup in the coming quarters after severe winter weather, a widening trade gap and port disputes on the West Coast dampened GDP growth in the first quarter. “Similar to last year, economic growth will likely rebound as the year progresses, although perhaps not as robustly as what was seen in 2014,” he says. “However, as long as jobs are being added at a respectable pace, gradual increases in demand for commercial spaces and leasing projects should continue.”