Commercial real estate market continues positive trend

The commercial real estate market should continue to improve.

More economists feel confident about the economic situation and commercial real estate market will continue to grow during the next several months, even if the forecast is more cautious, according to a report from the ULI Center for Capital Markets and Real Estate. Many property management companies may benefit from the continued growth, which could keep occupancy levels elevated.

Overall, the gross domestic product growth for the country should be approximately 2 percent for the remainder of the year, and the same next year, according to ULI's Real Estate Consensus Forecast. In 2014, the rate should rise to nearly 3 percent. This could help create nearly 2 million jobs this year, as well as an additional 2 million next year. In 2014, this should rise to nearly 2.5 million.

"What this survey suggests is that, in general, the U.S. economy is making progress inch by inch," said Dean Schwanke, executive director of the ULI Center for Capital Markets and Real Estate. "Nothing indicates a quick turnaround, but the economy and the real estate industry are moving toward a notable improvement by 2014."

Commercial market progress should continue
The commercial real estate industry may not experience as much of an improvement as previously projected, but it should still improve in the next couple years, the forecast explained. Total transaction volume this year should total $223 billion, which is $4 billion lower than last year's figure. However, this will jump to $250 billion in 2013, as well as $275 billion one year later.

The retail market should experience the strongest return total this year, as it is expected to be 11.4 percent, the report explained. Additionally, the apartment market should also be above 11 percent. Industrial properties could have a return of more than 10 percent, while offices are expected to total 9.4 percent.

Looking toward 2014, the report said that the industrial market will lead the way, with nearly 9 percent higher returns. Office properties should be close behind, while retail returns will be around 8 percent.

The apartment market is projected to have a return rate of 7.8 percent during that year, as well, the report added. This is important, as the market's vacancy rate should stay below 5 percent through 2014. 

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