Demand for Commercial Real Estate Points to Improved Economy

News reports of an improved economy have been showing up more frequently in the 4th quarter of 2010. Just last week, CBRE Econometric Advisors released upbeat figures about the state of commercial real estate. After dropping for over 3 years, the office vacancy rate across the country has improved. At the same time, demand has increased for apartments. These trends show that both businesses and consumers have an improved sentiment about the future of the economy.

In the office market, analysts noted that vacancies declined in 32 out of 57 markets in the 3rd quarter of this year.  Office space in the suburbs, to date, has been more in demand than in downtown areas.  And the vacancy rate for industrial space dropped to 14% on a national basis. While some markets are performing better than others, St. Louis and Salt Lake City are seeing more activity in this sector than any other markets around the country. The retail space market has remained steady with a 13.2% vacancy rate. The rate had been climbing steadily since 2006 and the unchanged market in this sector for the 3rd quarter of 2010 shows that retail is no longer shrinking as it has been for 4 years.

Additional positive news for economic indicators is found in the apartment rental market. At the end of the 3rd quarter, the national vacancy rate was 5.7%. Analysts say this level is close to ‘historical norms’. Overall, demand for apartment units now equates to 300,000 annually.

Numbers like these mean that more businesses will be marketing their goods and services to consumers who may be willing and able to expand their economic footprint.
[Source: U.S. Office and Industrial Vacancy Rates Decline for First Time in Three Years. CBRE​.com. 11 Oct. 2010. Web. 8 Nov. 2010]

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.