WASHINGTON, DC-The National Association of Realtors foresees better—albeit only slightly—days ahead. Its forecast for 2012, released Monday morning, predicts modest growth for the commercial real estate industry, with vacancies starting to decrease and rents rising at a moderate pace. “Vacancy rates are flat, leasing is soft and concessions continue to make it a tenant’s market,” Lawrence Yun, NAR’s chief economist said in a statement. “However, with modest economic growth and job creation, the fundamentals for commercial real estate should gradually improve in the coming year.”
The commercial real estate market, in others words, will follow trends in the general economy, which is believed to continue to improve at a slow pace into 2012. NAR did not return a call to GlobeSt.com in time for publication.
One of the sectors poised to do the best is not surprisingly multifamily, which already is posting some of the strongest fundamentals for commercial real estate. Yun predicts that rent growth for this sector could approach 7%, assuming that new construction doesn’t significantly step up. Other sectors will post improvement as well: vacancies are forecasted to decline a 0.6 percentage point in the office sector, a 0.4 point in industrial real estate and 0.8 point in the retail sector.
New construction—in multifamily and in other sectors as well—is not expected to erode these improvements, according to a separate study from the Society of Industrial and Office Realtors, which has released its SIOR Commercial Real Estate Index, an attitudinal survey of 231 local market experts.
The vast majority—96%—of respondents said new construction activity is lower than normal; 88% said it is a buyers' market in terms of development acquisitions. Prices are below construction costs in 83% of markets.
Still, the SIOR index, measuring the impact of 10 variables, rose a 0.6 percentage point to 55.5 in the third quarter, following a decline of 2.6 percentage points in the second quarter. This is the sixth consecutive quarterly improvement in the sector, which still remains below a level of 100, indicating a balanced marketplace.
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