Late Summer 2016 Commercial Real Estate Update
Late Summer 2016 Commercial Real Estate Update

SVN consistently keeps up with the most recent commercial real estate reports and industry trends. In a recent blog post, SVN researchers discuss the late summer 2016 commercial real estate update. By analyzing second quarter market reports from REIS, SVN produced market information that is valuable to commercial real estate investors and advisors. Overall, the commercial real estate industry is steadily growing and performing well. This is a result of stable demand and limited supply, according to the SVN commercial real estate update. Other commercial real estate information such as construction, rent growth and vacancy rates can be found in the report below. Be sure to read the excerpt below and click the green button at the bottom to view the full commercial real estate update.[bctt tweet=”2016 continues to be a year of strong performance in commercial real estate. #CRE “]

2016 Continues to be a Year of Strong Performance in Commercial Real Estate

Commercial Real Estate UpdateWhile macro-economic uncertainty and global instability may grab headlines, commercial real estate fundamentals and pricing continues to grow and expand according to second quarter results of major real estate data providers REIS, Inc. and CoStar Group. Overall with limited exceptions, all major sectors of commercial real estate experienced positive net absorption, declining vacancies, and positive rent growth in the second quarter of 2016, continuing a growth trend that has been in place for several years now according to REIS, Inc. The leading sector, in terms of rent growth, was multifamily with an approximate 1% growth in effective rents while office, industrial, and retail all experienced rates around 0.5%, which is just above estimated inflation. The improvements come as a result of sustained, stable new demand and limited new supply. In fact, REIS, Inc. reports that in the second quarter, completions of new apartment units, office space, and retail space fell in year over year measures as the overall pace of new construction slowed slightly. Census Bureau data also showed an overall rate of decline in volume for construction spending in all categories as well.

Slow and Steady Growth Through 2Q ’16

Thus, the markets are facing a continued dynamic of slow, but meaningful demand growth with relatively slower rates of new supply expansion; thus the result of higher rents and lower vacancies is entirely logical. Further, this condition of relative undersupply is only likely to get worse before getting better as capital markets remain constrained in financing new developments. So for now, tenants will be the losers and landlords the winners. Of course, the lack of quality, available vacant space in some markets is actually forcing firms to move markets to expand and thus causing some pain in some municipalities’ economic development initiates. Enterprising developers in certain markets may find great reward in speculative development at this stage of the cycle.


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