According to NAR's chief economist, Dr. David Lereah, the report shows that 2000 was a solid year for the commercial marketplace. However, a slight slowdown in all of the sectors except for multifamily housing should be expected. Multifamily housing should remain fairly stable.
The NAR reported resilience in the office market as the national vacancy rate tightened to 9.7% in the third quarter. Demand for office space rose 4% from a year earlier, whilesupply increased by only 2.6%.
New construction should bring office inventory vacancy rates up to 10.6% in 2001 in comparison with a projected 9.8% in 2000. Rental rates will be more negotiable averaging $29.35 per sf in 2001, compared to $27.87 per sf in 2000.
With warehouse space availability at 8.1% in the third quarter compared to 7.9% in the second, the NAR reports that 24 million sf was absorbed in the third quarter, lagging net new space completions of 32 million sf with a space availability rate of 8.1% in thethird quarter, compared with 7.9% in the second. NAR also reports that 33 million sf was absorbed in the third quarter, while net new space completions totaled 39 million sf. The national vacancy rate was a fairly stable 7.7%.
Revenue per available room in the lodging industry grew by 5.6% from January through September 2000, and daily room rates rose 4.8% in the third quarter in comparison with ayear earlier, according to the report. The slowing economy is expected to reduce corporate and leisure travel, and the NAR expects room occupancy to contract throughout 2001.
There's still a solid demand for multifamily housing. The third quarter saw a net absorption of approximately 36,200 units. At the same time, net completions of new rental units were nearly 52,000 units. In terms of demand and supply shows growth of 0.8% in comparison with a year earlier, and inflation-adjusted rents increased 0.9% in the same time frame.
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