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Commercial Real Estate Markets Poised for Rebound

NEW YORK CITY-Across all sectors of commercial real estate, the markets appear to have finally hit bedrock and are primed for a slow but steady rebound over the next 12 months, according to new research published on GlobeSt.com.

By Michael Gilliard | Updated on September 04, 2002

NEW YORK CITY-The nation’s commercial real estate market appears to be turning the corner, the latest Property & Portfolio Research National Outlook 2Q 2002 report on GlobeSt.com indicates. Retail and Industrial sectors in particular seem particularly primed for a rebound in 2003 as GDP growth swings into more positive territory by late this year.

Multifamily vacancy continued to climb to 6.9% in Q2, marking a 0.4% increase over first quarter. New development remains concentrated in entry markets in the South, including Atlanta, Dallas, Phoenix and Denver. Construction in the Northeast has remained much more subdued by comparison. Overall, the report indicates that new multifamily construction rates have begun to stabilize after a 13.4% decline from June 2001-June 2002, indicating that the multifamily market may have finally bottomed out. The apartment vacancy rate is expected to peak at just above 7% by the end of this year.

Office vacancy rates continue to rise, albeit at a much slower rate than earlier expected, predicting that this sector too may have finally hit bedrock. Led by Dallas and Boston, net absorption was negative in 33 of the 54 markets tracked by PPR in the first quarter, up from 44 of those markets the in Q1. Positive net absorption is expected to resume in the near term, and demand should continue to improve over the next several quarters. An eminent economic recovery and a slowdown in new office construction should allow the market to regroup and reemerge strongly in the near future.

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