Experts say the commercial real estate market will see a strong 2015, if projections come to pass. The National Association of Realtors (NAR) released figures that expect the commercial market to expand significantly, with office rents projected to rise 3.3 percent in the New Year.
"Solid economic growth in the third quarter proved that the second quarter wasn't an anomaly, as business spending increased, commercial construction rose and the labor market continued to make positive strides," said Lawrence Yun, NAR's chief economist. "Job growth is the catalyst to improved demand for commercial real estate leasing and new construction projects."
Data also shows that the commercial vacancy rate will see a conservative decline, from 15.7 percent to 15.6 percent, indicating that the current conditions should at least stabilize with modest improvement. Meanwhile, the rate of industrial vacancy will continue its decline, by 0.4 percent, according to the NAR. The global economy and American gross domestic product will weigh heavily on commercial activity in many markets, according to the statistics. If the somewhat dragging international economy continues, commercial real estate could be dampered in the United States.
The growth will be slow. Experts predict the numerical gains will be evident by the fourth quarter of 2015, so a number of variables will play out over the next 12 months. Nonetheless, the experts predict an overall stability in commercial real estate, with property owners enjoying rent increases and a favorable net absorption. In 2014, final figures are expected to top 35.6 million in net absorption while 2015 could see that number rise to 48.8 million, indicating a significant uptick in activity.
Even retail spaces will enjoy the economic climate in 2015, with a slight decline in retail vacancy projected to be 0.2 percent. year.