FEBRUARY 2011 |
www.opp.org.uk
BUSINESS BUSINESS USA Viewpoint | 27
U.S. Market Segment Forecasts
Multifamily Markets The apartment rental market - multifamily housing - is expected to get a boost from growth in household formation. Multifamily vacancy rates are forecast to decline from 6.4% in the current quarter to 5.8% in the fourth quarter of 2011. Average apartment rent is likely to rise 1.4% in 2011. Areas with the lowest multifamily vacancy rates presently are San Jose, California; Miami; Boston; and Portland, Oregon, with vacancies in a range around 4%.
Offi ce Markets Vacancy rates in the offi ce sector are forecast to decline from 16.7% in the current quarter to 16.4% in the fourth quarter of 2011, but with very little change during in the fi rst half of the year. Annual offi ce rent is also expected to decline another 1.6% in 2011. The markets with the lowest offi ce vacancy rates currently are New York City and Honolulu, with vacancies around 9%. All other monitored markets have double- digit vacancy rates.
Industrial Markets Industrial vacancy rates are projected to decline from 13.9% currently to 13.2% in the closing quarter of 2011. Annual industrial rent is also likely to fall another 3.4% in 2011. At present, the areas with the lowest industrial vacancy rates are Los Angeles; Salt Lake City; and Kansas City, with vacancies in the 8% to 10% range.
Retail Markets Retail vacancy rates are expected to change little, declining from 13.1% in the fourth quarter of this year to 13.0% in the fourth quarter of 2011. Average retail rent is expected to largely stabilize this year, slipping 0.3%. Markets with the lowest retail vacancy rates currently include San Francisco; Orange County, Calif.; and Honolulu, with vacancies in the 7% to 8% range.
progresses, while the retail sector should hold fairly steady. Still, high vacancy rates imply falling rents.” On the residential front,Yun
anticipates a rise in household formation from an improving economy, which will increase demand for housing, both ownership and rental. “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,” he added. “Apartment rents could rise by 1% to 2% in 2011, after having fallen in
“There will be a rise in household formation increasing demand for housing, ownership and rental ... rents could rise by 1% to 2%”
2009 and no growth in 2010,” Yun said. “This rent rise therefore could start to force up broader consumer prices as well.” He noted that the housing shelter cost of primary rent, and owner’s rental equivalence, is the biggest component in the Consumer Price Index, accounting for 32 percent of its total weight. So what is attracting foreign
investors to the U.S. if the economy is still “weak but hopeful?” Therein lies the divide. Properties in stronger markets are attracting investor
interest, while smaller properties in slower markets continue to display signs of distress. According to the AFIRE survey, residential investors overwhelmingly chose New York and Washington, D.C. as the two top global cities for their real estate investment dollars.
“Except for multi-family housing,
[investors] are not scattering their interest throughout the U.S., but rather narrowly targeting it to New York City and Washington, D.C., to an even greater extent than before,” Fetgatter said.
Financing continues to be the main
obstacle facing investors trying to close deals. 2011 NAR Treasurer Bill Armstrong promises that NAR continues to advocate on behalf of buyers to open credit lines. “NAR is working every angle possible to open credit lines. “We’re testifying before Congress, advocating for strong accounting rules, and planning to educate the new members of Congress on the issues affecting the property market,” he said. That being said, buyers with
cash are facing few, if any, competitors in bidding for a building. What is an estate agent’s
next step in steering their buyers toward the increasingly popular United States? Educate yourself on where, what, and how foreign investors are purchasing in the U.S. For the full AFIRE survey report, visit
www.afire.org. More information and research on the U.S. commercial and residential real estate market, please go to
www.realtor. org.
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