Commercial property market experiences drop in vacancy

Apartment vacancies have declined.

A recent report from CBRE showed that commercial property managers across the country experienced vacancy declines during the second quarter.

Overall vacancy dropped to 15.7 percent, which was 30 basis points lower than the previous statistic, the report noted. In addition, this is the lowest figure since 2009. Industrial availability on the national level fell 20 basis points, and stood at 13.2 percent during the quarter.

Retail properties specifically saw vacancies decline to 13 percent in the quarter, which showed that the market could be catching up to other, more successful commercial real estate markets, according to the report. Apartment vacancies fell to 4.8 percent, which was 60 basis points lower than the previous statistic.

"The commercial real estate recovery remained intact in the second quarter, despite growing worries about the global economy," said Jon Southard, managing director of CBRE. "With construction well below typical levels in a recovery, any and all improvements in demand get channeled into a lower vacancy rate."

The office market witnessed a 30-basis-point drop to 15.7 percent in the second quarter, the report explained. This was the first quarter in three years that this rate was lower than 16 percent.

"At 15.7%, the national vacancy rate is still well above its pre-recessionary low of 12.4% and the recent headwinds facing the office markets have not gone away," Southard noted. "However office fundamentals have been helped by record low construction levels and deep rental discounts driving leasing volume, but more support is needed from the job market for stronger absorption in the second half of 2012 and 2013."

Both the urban and suburban vacancy rates dropped during the second quarter, CBRE explained. In suburban regions, the overall rate declined by 40 basis points, while urban vacancies dropped by half of that figure. More than 60 percent of markets in the U.S. experienced vacancy drops.

Albuquerque, Charlotte, Seattle, San Diego, Norfolk, Boston and Richmond had the most significant vacancy rate declines around the country for office properties, as all of these fell by at least 100 basis points, the report added. Houston, Seattle, San Jose and San Francisco all had declines of 50 basis points or more. Those markets have been successful mostly due to their booming technology and energy industries.

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