Commercial real estate to grow steadily in 2017

[Dustin Ruhl]

According to new information released by the National Association of Realtors, steady growth in the commercial real estate market is expected throughout 2017. Because of job growth and the demand for additional work space, office vacancies should fall by about 1.1-12.1%. Furthermore, industrial space will fall by about 1.3 to 7.1%, and rent availability should decrease from 0.7 to 11.2%. Last year was the 11th consecutive year of below average GDP growth. However, a modest expansion of about 2.4% is expected due to a boost in residential construction fueled by a renewed corporate optimism. Lawrence Yun, NAR's chief economist, explains that steady hiring along with low local unemployment rates are supporting increased wages and spending, which positively affects the demand for commercial property of all types nationwide. Meanwhile, with new apartment vacancy rates at approximately 6.5%, the multifamily property market will remain about the same for the year. In general, home ownership rates will stay about the same due to low supply and the challenges many face associated with affordability. The residential rental market should maintain stable growth, especially in metropolitan areas where sky high home prices and increasing mortgage rates make renting for at least another year inevitable for many.

Key Takeaways:

• Commercial real estate is expected to experience steady growth in 2017.
• Multifamily sector is projected to experience little change in availability as new apartments maintain vacancy rates at 6.5%.
• Home ownership rate will likely remain low due to ongoing supply and affordability challenges.

"Steady hiring and low local unemployment levels are finally supporting higher wages and increased spending, which in turn bodes well for sustained demand for all commercial property types."

Read more: http://www.mpamag.com/news/commercial-real-estate-to-grow-steadily-in-2017-61116.aspx