Since the recession, it’s been very touch and go for both residential and commercial real estate, but the good news is that it looks like we’ve finally really reached true recovery in the markets.
That’s great for businesses, whether they’re looking to invest in some real estate of their own as an income stream or simply buy a piece of commercial real estate to make their headquarters. According to the National Association of Realtors Commercial Real Estate Outlook: 2016.Q3 report, the commercial sector is coming up roses, even though business itself is undergoing some dramatic transformation.
Office Vacancies and Industrial and Retail Availability Finally Shrinking
After years of businesses shuttering their physical locations in favor of an increased online presence, NAR expects that office, industrial and retail spaces will start filling up again.
Employment gains will help drive demand, as more workers mean more shoppers, as well as more need for spaces to house those workers. Office space availability is expected to drop from 16.0 percent to 11.9 percent year over year in Q3 2016, industrial spaces will contract from 11.5 percent availability to just 9.4 percent yoy and even retail spaces will be absorbed some, dropping from 13.0 percent open to 11.5 percent available yoy.
These sectors aren’t expected to be significantly influenced by new construction, most of what is being absorbed is existing space, which is good since too much excess commercial space can create massive blight for cities and further drag local economies down. On the other hand, residential multifamily is expected to experience some major construction booms.
Millennials Moving Out
As available multifamily spaces contract to around 5.9 percent availability, contractors are working hard to open up more units for the mass of Millennials who will soon be moving out on their own. Even with the glut of new construction, multifamily vacancies are expected to hover around 6.1 or 6.2 percent through 2017.
With unemployment projected to continue to decline and consumer confidence expected to climb dramatically, there’s no better time to be in commercial real estate. It could still take a year or more for your business to see the benefits of these many positive signs of economic recovery, but they are absolutely on the horizon. As customers jump back in the market and start to spend their hard earned cash on products, businesses will need even more physical space (even eCommerce companies have to store their products somewhere) and those multifamily units will fill up. Commercial real estate is looking up!