Vacancy Rates to Peak by Year End

BOSTON-The vacancy rates in most sectors of the commercial real estate market should peak by the end of this year, according to a study of 54 markets nationwide conducted by Portfolio and Property Research, a locally based real estate research group.

The study notes “the magnitude and velocity of the recent rise in vacancy rates has certainly varied across markets and property types.” But it adds that “while further softening is expected, vacancies should begin to correct as the economy continues to recover and demand growth rebounds. In addition, supply levels have been much more disciplined in this cycle, which will help prevent vacancies from reaching peak levels experienced in the last cycle.”

“We should see things starting to recover by 2003,” Nancy Chesley, real estate economist and product manager at PPR, tells GlobeSt.com. Chesley points out that construction has begun to shut down in most markets and demand is slowly recovering as the economy is beginning to show signs of improvements and lay offs are beginning to wrap up. In general, it takes about six months for the economic recovery to ripple through the real estate market and Chesley says that this case is no exception.