Poor jobs creation and limited access to financing have resulted in the recovery of US commercial real estate slowing down. This is the finding of a new report published by the National Association of Realtors (NAR), which noted demand for space is still in positive territory, but has fallen back since the first quarter of the year.
Lawrence Yun, chief economist at the NAR, explained lower job creation in the second quarter of 2012 has had an impact on the number of firms looking for office premises. The vacancy rate for offices is currently around 16 per cent, whereas industrial and retail properties have vacancy rates closer to ten per cent. "Industrial and warehouse space is holding on better because imports and exports have advanced," Mr Yun stated. However, office rents are expected to increase more than any other sector, climbing by two per cent this year, according to NAR predictions. By contrast, industrial rents are likely to rise by 1.7 per cent and a 0.8 per cent hike is anticipated for retail leases by the end of 2012.
This positive trend may not last, though, with CBRE's US Office and Industrial MarketView reports for the second quarter of the year suggesting the global economic slowdown will impact both these sectors, putting pressure on demand for new space. The organisation explained many companies have been taking advantage of favourable leasing contracts to upgrade their industrial space, but noted demand is likely to become flat for the remainder of the year due to the poor economic outlook.
A similar outcome is expected in US office markets, according to CBRE, with the firm stating the short-term issues in the country's economy are likely to result in "a loss in leasing momentum over the next couple of quarters". Meanwhile, the US's near to mid-term performance will depend on whether the country's government can avoid "the looming fiscal cliff" in 2013 and if the eurozone crisis can be solved in a satisfactory manner, the organisation asserted.