National office vacancy rates have been forecasted by the National Association of Realtors to decrease 0.8 percent to 14.8 percent over the coming year as continued job creation drives demand. The vacancy rate for industrial space is expected to decline 1.4 percent to 9.7 percent, and retail availability is expected to decrease 1.3 percent to 11.3 percent. With new apartment construction projects coming in several markets, only multifamily vacancies are forecast to increase over the next year, from 6.1 percent to 7.3 percent.
Lawrence Yun, NAR chief economist, says the outlook for the commercial real estate sector continues to look bright despite the multiple headwinds that have held back the economy in recent months.
“Temporary turbulence in the financial markets, a stronger U.S. dollar hurting exports and economic weakness overseas chipped away at third quarter growth and led to some deceleration in the pace of commercial investments,” Yun said in a press release. “The good news is that these deterrents are slowly residing, which should ultimately reawaken the growing appetite for commercial space heading into next year.”
Regionally, several states in the South and West have outperformed the rest of the country in job growth over the past year. Led by strong demand for apartments from faster household formation and rent growth, metro areas in those states are expected to see elevated levels of new construction, which will lead to a slight uptick in vacancy rates.