It does not seem like 2010 will be the recovery year of commercial real estate. In fact, vacancy rates look like they are about to rise, while rents look like they are about to drop.
Not a pinch of meaningful recovery seems to be expected before 2011 due to problems with consumer confidence, unemployment and various other conditions of the economy.
Due to the recession’s lingering impact from the last few years, vacancy rates are going to go even higher and a lot of owners of commercial properties might have to make some rent concessions.
The job market is expected to get better sometime this year, so there should be a rise in demand for warehouse and office space, but it will probably not happen before 2011.
The realtors analyze quarterly data, offering up forecasts for the four primary commercial sectors, as follows:
The office sector forecasts a rise in vacancy rates to 17.6 by the end of the year compared to last year’s 16.3%. On the other hand, yearly office rent looks to go down by 7.2%.
In the industrial market, the vacancy rates seem to rise by 14.9% by the end of the year compared to last year’s 13.9%. On the other hand, yearly industrial rent will probably go down by 9.6%.
Retail vacancy rates look to rise a little bit to 12.7% from its 12.4%, while regular retail rent might drop by 2.4%
In the market of apartment rental, vacancy rates will most probably go down to 6.6% compared to the previous 7.4%, while regular rent might drop by 3.4%.