A Steady Economy Should Support Commercial Real Estate In 2017

Article originally posted on HERE on February 26, 2017

The commercial real estate market should remain steady in 2017 as demand grows in smaller markets, according to the quarterly forecast from the National Association of Realtors.

The report predicts national office vacancy rates will fall 110 basis points to 12.1% this year, pushed down by more office demand as jobs grow. Industrial space will fall 130 bps to 7.1% vacancy, retail will decline 70 bps to 11.2%, and multifamily is expected to hold even around 6.5%, Builder reports.

The predictions aren’t much different from what other economists are saying about this year: The cycle may have reached its peak, but even slowed growth will continue to support the industry. NAREIT has declared CRE will remain strong this year with more leasing demand and strong economics. CRE pricing is up 8.5% for February from a year ago, but growth is slowing this year, according to Ten-X’s CRE Nowcast.

National Association of Realtors chief economist Lawrence Yun said the nation’s economy could see slight improvement through steady hiring and low unemployment leading to higher wages and increased spending — all factors that support CRE demand.