Report shows vacancies to drop in commercial real estate sector

Washington, D.C., is one of the top markets for commercial office space.

The top markets for commercial office space in the United States are Washington, D.C., New York City, Little Rock, Ark., and Birmingham, Ala., according to a recent report from the National Association of Realtors. 

D.C. owns the nation's best vacancy rate at 9.7 percent, New York is just behind at 9.8 percent, and Little Rock and Birmingham come in at 12.1 percent and 12.4 percent, respectively.

The association's quarters forecast predicts vacancy rates for commercial property to diminish by 0.2 percent over the next year, but office space vacancies aren't expected to do as well as retail or the industrial sector.

"Office vacancies haven't declined much because total jobs today are still below that of the pre-recession level in 2007, but rising international trade is boosting demand for warehouse space," said Lawrence Yun, the chief economist for the National Association of Realtors. "Consumer spending has been favorable for the retail market, and rising construction is keeping apartment availability fairly even, though at low vacancy levels. That, in turn, is pushing apartment rents to rise twice as fast as broad consumer prices and average wage growth."

Multifamily property isn't expected to post a huge gain in vacancy rates for the commercial sector due to properties already being gobbled up quickly.

Oceanside industrial sector especially strong
Vacancies in the industrial sector are expected to dip from 9.3 percent in the third quarter of 2013 to 8.7 in the third quarter of next year. Industrial rents are also presumed to rise 2.4 percent through the end of 2013 and 2.6 percent in 2014.

The lowest industrial vacancy rates is in Orange County, Calif., at just 3.8 percent. Los Angeles (4 percent), Miami (5.9 percent) and Seattle (6.4 percent) all reside in the top four, making it a sweep for the coastal cities.

Retail sector vacancies to fall
The National Association of Realtors also anticipates a decline in vacancies in the retail sector. Year-over-year in the third quarter, vacancy rates are predicted to drop from 10.6 percent to 10 percent in 2014.

The association envisions the average retail rent to jump 1.5 percent in 2013 and 2.3 percent in 2014. The nation's premier markets for landlords owning retail space include San Francisco, Fairfield County, Conn., Long Island, N.Y., and Orange County.

San Francisco has a vacancy rate of 3.9 percent, while Orange County has a rate of 5.5 percent.

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