Commercial Real Estate Sectors in U.S. Performing Well in 4Q

January 12, 2012 / Elizabeth Buckley, Commercial Property Analyst

The United States vacancy rate for office space improved. In the fourth quarter of 2011 it went down 16 percent (20 basis points). The rate for industrial properties that were available dropped as well, down to 13.5 percent. According to industry experts, this shows a welcome upswing in commercial real estate in 2011, the most improvement since the recession began.

Commercial Real Estate Sectors in U.S. Performing Well in 4Q

The apartment rental rate continued to rise. Apartment vacancy rates dropped to 5.3 percent in the fourth quarter of 2011. This recovery rate was gradual as predicted by those experts in the industry. They now predict a slow upswing in 2012.

Performance in the overall market showed results of some improvement and continuing sluggishness in some sectors. For example, there was some residential improvement in apartment rentals. Some of these pockets of improvement were in San Diego, Miami and Orlando along with some other major cities.

As for the retail availability rate, it was up by 20 bps compared to the end of 2010. The second half of 2011 was a period of stabilization.  The economic upswing propelled the improvement in availability rates.

As the real estate sales market remained depressed, more families were renting apartments. Those who lost homes due to foreclosure had to live somewhere. That accounts for the upturn in apartment rentals. Rental growth is strong and rising, especially in Portland, Cleveland, Los Angeles, San Diego and a scattering of other major cities. Commercial real estate rentals are expected to continue to rise, albeit slower than the industry would like.

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