WASHINGTON – Nov. 27, 2012 – Most major commercial real estate sectors are improving and easily absorbing the relatively small amount of new space becoming available.

According to the National Association of Realtors®’ (NAR) quarterly Commercial Real Estate Outlook, the multifamily market has completely recovered. And NAR expects a more hopeful tone in the nation’s capital to pave the way for a more generalized commercial recovery.

“The primary factor holding back greater job creation has been uncertainty over regulations and associated costs,” NAR Chief Economist Lawrence Yun says. “With the elections behind us and Washington apparently resolved to prevent a fiscal cliff, it’s hoped that ambiguity over regulatory issues will clear relatively soon, so employers can understand the rules of the game and the layout of the field.”

Yun expects vacancy rates to decline over the next four quarters in the office, industrial, retail and multifamily markets. The main impediment to commercial real estate in the near future is a tight credit environment, especially for smaller properties.

The Commercial Real Estate Outlook offers projections and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas is provided by REIS Inc.

Office market
Vacancy rates in the office sector are projected to fall from an estimated 16.7 percent in the current quarter to 15.7 percent one year from now – in the fourth quarter of 2013. Washington, D.C. (9.6 percent), New York City (10.1 percent) and New Orleans (12.9 percent) currently have the lowest vacancy rates.

Office rent is expected to increase 2 percent this year and 2.5 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is predicted to total 21.7 million square feet in 2012 and 49.0 million next year.

Industrial market
Industrial vacancy rates should decline from 10.1 percent in the current quarter to 9.5 percent in the fourth quarter of 2013. Orange County, Calif. (4.3 percent), Los Angeles (4.4 percent) and Miami (6.5 percent) have the lowest industrial vacancy rates currently.

Annual industrial rent is forecast to rise 1.7 percent in 2012 and 2.2 percent next year. Net absorption of industrial space nationally will probably total 93.4 million square feet this year and 89.6 million in 2013.

Retail market
Retail vacancy rates are expected to ease from 10.8 percent today to 10.6 percent in the fourth quarter of 2013. San Francisco and Fairfield County, Conn. (3.9 percent each), Long Island, N.Y. (5.1 percent) and Orange County, Calif. (5.4 percent) currently have the lowest retail vacancy rates.

Average retail rent should increase 0.8 percent this year and 1.4 percent in 2013. Net absorption of retail space is estimated to be 9.1 million square feet this year and 19.8 million in 2013.

Multifamily housing market
Multifamily housing should see vacancy rates decline from 4 percent currently to 3.9 percent in the fourth quarter of 2013, making it a landlord’s market (generally considered anything below 5 percent) that allows landlords to justify higher rents. Portland, Ore. (2.1 percent), New York City (2.2 percent) and Minneapolis (2.3 percent) currently have the lowest multifamily vacancy rates.

Average apartment rent should increase 4.1 percent in 2012 and another 4.6 percent next year. Multifamily net absorption is likely to be 219,700 units this year and 234,600 in 2013.

© 2012 Florida Realtors®