Commercial building occupancy still falling, Realtors say
Vacancy rates will continue to rise in most types of commercial real estate such as office and industrial buildings until the end of this year or early 2011, the National Assn. of Realtors said Wednesday.
The only bright spot for landlords is apartments. Demand for units should increase in the second half of the year as new jobs are created in the improving economy and new households are formed, said Lawrence Yun, the association’s chief economist.
“However, the office, warehouse and retail sectors continue to experience the delayed effects of the recession,” Yun said. “These sectors should see gradual improvement after jobs pick up and create additional demand for space, meaning a broader improvement in commercial real estate is likely in 2011.”
Commercial rents will also continue to dip in 2010, Yun said, though apartment and industrial rents are close to stabilizing.
The association’s report is in line with those of real estate brokerages and other industry analysts who say that commercial property occupancy and rents are lagging indicators of the economy. As long-term leases expire, pared-back businesses look for smaller, cheaper quarters.
-- Roger Vincent