Apartment and industrial sectors show improvement

The third quarter of 2013 shows less industrial space vacancies.

The commercial property sector in the U.S. continues to find its footing despite rising interest rates and a fickle economy.

The latest report from CBRE, the world's largest commercial real estate services firm, shows a boost to all commercial sectors, including apartment and industrial markets, despite the fallout in Washington, D.C.

"While the partial federal government shutdown has added more uncertainty, it is likely to be a short-term disruption at the national level," said Jon Southard, managing director of CBRE's Econometric Advisors group. "The office market has performed as well as can be expected in light of the uncertainties."

Across the nation, office vacancy rates were on the decline during the third quarter of 2013. Vacancy rates decreased 10 basis points to 15.1 percent during that time, according to World Property Channel.

The vacancy rates were 50 basis points lower than the third-quarter rate in 2012 of 15.6 percent. CBRE tracked 63 markets and found that 38 showed a drop in office vacancy rates.

The suburbs also had a better vacancy rate than the city for office space. Vacancy rates in the suburbs dropped for the sixth straight quarter. Suburb vacancies fell 20 basis points to 16.6 percent while the downtown vacancy rate increased 10 basis points to 12.4 percent.

"Office market occupancy inched ahead in the third quarter," Southard said. "The slow progress remains consistent with a growing but fragile economy. However, industrial markets continue to out-perform due to improved foreign trade and resilient consumer and business spending at home."

The availability for industrial space decreased 30 basis points from the second quarter to 11.7 percent. The current rate is 290 basis points below the peak of the recession.

Demand for apartment buildings stable
Vacancy rates for apartment buildings stayed at 4.6 percent during the third quarter, according to CBRE. Vacancy rates in that sector are 4.8 percent lower than the 20-year norm, prompting CBRE to anticipate effective rent growth for apartment properties through 2013 and into 2014.

Twenty of the 63 markets monitored by CBRE posted a decline in apartment vacancy rates. Sacramento, Calif., Atlanta, Dallas, Houston, Jacksonville, Fla., and Portland posted some of the best year-over-year declines in vacancies.

On the other end of the spectrum, Cincinnati, Indianapolis and St. Louis were three of the markets with the largest increase in vacancy rates over the past year.

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