Commercial Real Estate Vacancy Rates
Commercial vacancy rates declined in 2011 for three of the four largest property categories – office, apartments and industrial – while rising by a slim 10 basis points for retail. The demand drivers for apartments (declining homeownership rate, moderate job growth) and industrial space (rising international trade and domestic freight shipments) generated steady absorption. While those two property categories will tighten further next year, increasing deliveries of new space will restrain the pace of tightening. The demand drivers for office space (white collar job growth) and shopping centers (retail sales), while less impressive, helped fill space in 2011. For 2012, look for vacancy rates to fall across all property types. The major caveat is the European financial crisis and its potential to spark – if not a Lehman-like freezing of the credit markets – perhaps a wave of conservative sentiment among lenders that could hinder economic growth. The pending recession spreading across the euro zone, which was triggered by the financial crisis, also is concerning for the U.S. economy as it will dampen U.S. exports into the region.
Robert Bach, Senior Vice President, Chief Economist, has 30 years of professional experience in real estate market research, consulting and city planning. His commentary on the real estate markets is provided here on a weekly basis.
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Robert Bach
Senior Vice President, Chief Economist
312.698.6754
Newmark Grubb Knight Frank - Atlanta 