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NAR expecting growth in commercial sectors

The commercial real estate market is set to see a reduction in vacancies, according to forecasts released by the National Association of Realtors. Furthermore, economic growth in Texas and across the U.S. has lead to a continued wave of optimism in commercial markets. A 1.1 percent decline in commercial vacancy rates has been matched in the industrial sector, where vacancies are expected to decline to 7.8 percent.

Vacancy in retail space is expected to decline by 0.4 percent, to 11.4 percent, and the multifamily sector should see a decline in vacancies as well, down to 6.1 percent from 6.6 percent. According to the chief economist with NAR, strong consumer and business confidence and spending caused 3 percent growth during the second quarter of 2017. The economist believes further growth is likely before the end of the year, and that should be a boon to interest in all kinds of commercial real estate.

He went on to say, though, that prices are not expected to rise despite the sunny outlook. Slowing investor activity, especially with regard to Class A assets, is likely to result in a pricing plateau. Investors will likely look to tertiary markets for stable commercial property investment opportunities.

Apartment sector gains might be impacted by a slowdown in parts of Texas that were heavily affected by Hurricane Harvey. Any such slowdown is expected to be temporary and will likely be offset by higher levels of household formation. Individuals interested in commercial real estate should consult with an attorney before investing. An attorney with experience in commercial real estate law can draft or review transfer documents or negotiate terms of sale. The lawyer can also argue on the client’s behalf during real estate disputes or suggest structuring options to maximize tax benefits.

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