Improving Economy Helps Vacancies Rebound

 

The National Association of Realtors claims that U.S. commercial property vacancies may have peaked, caused by the improving economy.

"The basic fundamental of rising commercial leasing demand, resulting from a steadily improving economy, means overall vacancy rates have already peaked or will soon top out," Lawrence Yun, chief economist of the real estate group, said in a statement today. "Multifamily housing is the one commercial sector that has held on relatively well in the past year, and can expect the best performance in 2011."

U.S. gross domestic product grew by 2.5% in the third quarter, beating the 2% estimate, according to the Commerce Department. As the economy improves commercial real estate occupancies increase as businesses expand and employers add jobs.

"Property fundamentals are improving, investment capital is slowly flowing back into the sector, commercial mortgage originations are increasing, and demand for CMBS issuance is gaining traction," Standard & Poor's said in the report today.

As commercial property grows, investors are also looking to residential property to decide where the peak is, or whether it has already passed.