NAR Says Vacancy Rates to Decline, Rent Recovery Delayed

The National Association of Realtors has released its latest Commercial Real Estate Outlook with projects for the real estate markets and indicates that there's a stabilizing trend underway in the commercial real estate markets. From the first quarter of 2011 to the first quarter of 2012 NAR expects that the vacancy rates will decline 0.5% in the office sector, and that office rents are forecast to fall 1.8% this year "before turning higher by 4% in 2012." Lawrence Yun, NAR chief economist, suggested that a pullback in construction is helping to stabilize the market. "Very limited construction of new commercial real estate over the past few years has essentially fixed the supply of available space," he said. "This means vacancy rates could fall quickly from any increase in demand for commercial space."

A summary of the Office Markets outlook:

• Vacancy rates in the office sector are forecast to decline from 16.5% in the first quarter of this year to 16% in the first quarter of 2012.
• The markets with the lowest office vacancy rates currently are New York City and Honolulu, with vacancies in the 8-9% range.
• In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be 14.5 million square feet in 2011.

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