Commercial real estate market improves, says CBRE

The commercial market had improvements during the third quarter.

The commercial real estate situation around the country has made gains, according to a report from CBRE Group.

Property management companies experienced the availability of industrial properties decline to nearly 13 percent during the third quarter. This decline was the ninth quarter in a row where this occurred, according to the report. This is significantly lower than the high point before the recession began. More than 35 of the markets examined had declines in property availability, while 15 metropolitan statistical areas experienced a rise.

Apartment vacancies fell to 4.6 during the third quarter, which was 4 percentage points lower than the same period in 2011, CBRE explained. This also showed a decline for more than 50 markets compared to the third quarter of last year. Despite the continued drop in vacancies, the trend slowed from past drops.

"Real estate occupancy continues to improve slowly, mirroring the sluggish economic recovery," said Jon Southard, managing director of the Econometric Advisors group for CBRE. "However, local conditions continue to vary widely. The majority of markets did see more space occupied than in the prior quarter, but in many markets, the occupancy increase was not enough to significantly decrease the total space available."

Office, retail markets experience declines
The office market's recovery continued during the third quarter, as vacancies fell to 15.5 percent, which was 20 basis points lower than the previous quarter, according to the report. Additionally, when compared to the third quarter of 2011, the figure was 70 basis points lower. More than 30 MSAs experienced vacancy declines.

Southard explained that job growth is not as high as it could be, which has hurt the office market, overall. Additionally, the fiscal cliff and other economic issues has affected some cities. However, if some issues are figured out – especially the fiscal cliff – there could be a higher level of employment and decline in vacancies in the next two years.

The retail market did not experience a vacancy decline as significant as the office market, as the figure fell to 12.9 percent, the report noted. This was 10 basis points lower than the second quarter, as well as 30 basis points below the figure recorded one year earlier. Despite the slower decline, Cincinnati and Cleveland, as well as Jacksonville, Florida; Bakersfield, California; and Charlotte, North Carolina.

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