Vacancies Decline in REALTORS®’ CRE Markets

Commercial fundamentals in REALTORS®’ markets continued gaining strength during the second quarter of 2016. Based on NAR’s Commercial Real Estate Market Trends report, leasing activity advanced.

With demand for commercial space rising, developers have taken note and ramped up construction. New commercial construction mirrored the broader economic slowdown, posting a 5.3 percent gain from the prior quarter. However, demand continues to outpace the supply pipeline, leading to rising occupancy.

Vacancy rates continued declining, ranging from a low of 5.0 percent for apartments to a high of 13.2 percent for hotel properties. Office vacancies declined 365 basis points year-over-year, to 12.3 percent.  Industrial availability witnessed a yearly decrease of 95 basis points—to 9.8 percent. Retail vacancies slid 70 basis points on a yearly basis, to 11.8 percent. With declining vacancies, lease concessions declined 5.5 percent.

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To access the latest Commercial Real Estate Market Trends report, visit: http://www.realtor.org/research-and-statistics/commercial-real-estate-market-survey.

George Ratiu, Director, Quantitative and Commercial Research

George Ratiu, Research Economist, writes regular economic columns and conducts research in the areas of commercial real estate, international investments, mortgage performance and foreclosures. He produces NAR’s Commercial Real Estate Outlook and manages quantitative surveys, including the Commercial Real Estate Quarterly Market Survey.

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