IRR: CRE markets tied to employment continue to struggle
Despite showing signs of improvement last year, the commercial real estate market continues to be held back by high unemployment, REIT.com reported.
According a report released Monday by New York-based Integra Realty Resources Inc., office vacancy rates in the nation’s central business districts rose to 14.6 percent in 2010 from 13.14 percent the prior year as other commercial real estate sectors with ties to the employment rate also worsened.
In the industrial sector, the national vacancy rose to 10.9 percent last year from 10.2 percent in 2009, Integra Realty said.
The overall outlook, however, is improving.
“Economic forecasts predict that the U.S. economy should slowly begin adding jobs towards the end of 2011, which will play a major role in real estate,” said Jeffrey Rogers, president of Integra Realty. “While the level of growth expected is modest, we anticipate slight improvements in certain corresponding sectors, such as vacancy rates for office, industrial and retail properties in the coming year,” he said.
The multifamily and lodging sectors experienced the greatest growth in 2010, a trend that is expected to continue until job growth becomes more vigorous.