landlord’s market, time to invest !! contact me for info, Best Sindy

Commercial Real Estate Vacancy Rates Improving, Rents Firming

Washington, DC, February 24, 2012
According to the National Association of Realtors® quarterly commercial real estate forecast, all of the major commercial real estate sectors are seeing improved fundamentals, but multifamily housing is becoming a landlord’s market commanding bigger rent increases. These trends also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey.
Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. “Sustained job creation is benefiting commercial real estate sectors by increasing demand for space,” he said. “Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest.”
NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.
“Household formation appears to be rising from pent-up demand,” Yun said. “The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term.”
The Society of Industrial and Office Realtors® shows a notable gain in its SIOR Commercial Real Estate Index, an attitudinal survey of 297 local market experts.¹
The SIOR index, measuring the impact of 10 variables, jumped 8.3 percentage points to 63.8 in the fourth quarter, following a gain of 0.6 percentage point in the third quarter. The index remains well below the level of 100 that represents a balanced marketplace, which was last seen in the third quarter of 2007.
Most market indicators posted advances in the fourth quarter, but 71 percent of respondents said leasing activity is below historic levels in their market – an improvement from 83 percent in the third quarter. Only 29 percent report there is ample sublease space available.
Office and industrial space remains a tenant’s market – 87 percent of participants feel that tenants are getting a range of benefits ranging from moderate concessions to deep rent discounts.
Construction activity is still low, with 95 percent of experts reporting it is below normal, and 83 percent said it is a buyers’ market for development acquisitions; prices are below construction costs in 78 percent of markets.
Participants are broadly expecting stronger conditions for the current quarter, with two out of three expecting market improvement.
NAR’s latest Commercial Real Estate Outlook² offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc.,³ a source of commercial real estate performance information.
Office Markets
Vacancy rates in the office sector are projected to fall from 16.4 percent in the current quarter to 16.0 percent in the first quarter of 2013.
The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5 percent; New York City, at 10.0 percent; and New Orleans, 12.4 percent.
After rising 1.6 percent in 2011, office rents should increase another 1.9 percent this year and 2.4 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 forecast at 20.1 million square feet in 2012 and 28.1 million next year.
Industrial Markets
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013.
The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.8 percent; Los Angeles, 4.9 percent; and Miami at 7.6 percent.
Annual industrial rent is expected to rise 1.8 percent in 2012 and 2.3 percent next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.
Retail Markets
Retail vacancy rates are forecast to decline from 11.9 percent in the current quarter to 11.0 percent in the first quarter of 2013.
Presently, markets with the lowest retail vacancy rates include San Francisco, 3.6 percent; Fairfield County, Conn., at 5.1 percent; and Long Island, N.Y., at 5.4 percent.
Average retail rent should rise 0.7 percent this year and 1.2 percent in 2013. Net absorption of retail space is projected at 9.9 million square feet this year and 23.9 million in 2013.
Multifamily Markets
The apartment rental market – multifamily housing – is likely to see vacancy rates drop from 4.7 percent in the first quarter to 4.5 percent in the first quarter of 2013; multifamily vacancy rates below 5 percent generally are considered a landlord’s market with demand justifying higher rents.
Areas with the lowest multifamily vacancy rates currently are New York City, 1.8 percent; Minneapolis and Portland, Ore., each at 2.5 percent; and San Jose, Calif., at 2.7 percent.
After rising 2.2 percent last year, average apartment rent is expected to increase 3.8 percent in 2012 and another 4.0 percent next year. Multifamily net absorption is forecast at 209,900 units this year and 223,600 in 2013.

Existing-home sales post third gain in 4 months

Great info from Inman News.
Have a great day, Sindy

NAR: large-scale REO-to-rental program not needed
By Inman News

Increased demand from investors and first-time homebuyers helped boost existing-home sales in January -- the third increase in the past four months, the National Association of REALTORS® reported.
NAR said total existing-home sales -- including single-family homes, townhomes, condominiums and co-ops -- were up 4.3 percent from December to January, to a seasonally adjusted annual rate of 4.57 million.
While that's essentially unchanged from the same time a year ago, for-sale inventory was down 20.6 percent from a year ago, to 2.31 million homes, a 6.1-month supply of homes at the current pace of sales.
Many housing analysts view a six-month inventory of homes as a good balance between supply and demand -- a larger inventory of homes can indicate an oversupply of homes for sale, which can undermine prices. When inventories drop below six months, the shortage of homes for sale can drive up prices.
"The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers," NAR Chief Economist Lawrence Yun said in a statement.
Yun cited the statistics as evidence that a government proposal to convert bank-owned properties into rentals on a large scale "does not appear to be needed at this time."
"Foreclosure sales are moving swiftly with ready homebuyers and investors competing in nearly all markets," he said.
Merrill Lynch analysts Michelle Meyer and Ethan Harris think part of the drop in inventory is due to delays in the foreclosure process in the aftermath of the so-called "robo-signing" scandal.
With top banks nearing a final settlement with state attorneys general, they expect the foreclosure process to accelerate, and for inventory to swell to eight months later this year.
The first REO-to-rental transactions are weeks away, but the property pools offered this year may be smaller and more manageable for groups of qualified local investors than previously assumed, Ken Harney reports.
NAR said foreclosures and short sales accounted for 35 percent of sales in January, and that the national median existing-home price for all housing types was down 2 percent from a year ago, to $154,700.
Investors purchased 23 percent of homes in January, up from 21 percent in December, while the percentage of first-time homebuyers increased from 31 percent in December to 33 percent in January.
Nearly one in every three January home sales was an all-cash transaction. A survey of NAR members showed more than half had at least one contract canceled or delayed in January, often as a result of a mortgage application being turned down or because appraisals come in below the negotiated price.
Single-family home sales were up 3.8 percent from December to January, to a seasonally adjusted annual rate of 4.05 million. That's a 2.3 percent increase from a year ago. The median existing single-family home price was $154,400 in January, down 2.6 percent from the same time a year ago.
Existing condominium and co-op sales increased 8.3 percent from December to January, to a seasonally adjusted annual rate of 520,000. That's a 10.3 percent decline from a year ago. The median existing condo price was $156,600 in January, up 2 percent from January 2011.
At the regional level, the West saw the biggest jump in sales, an 8.8 percent increase from December to January. Sales were down 3.1 percent from a year ago, however, and the median price was also down 1.8 percent from January 2011, to $187,100.
The Midwest saw the smallest jump in sales, with sales up 1 percent from December to January. Although that was a 3.2 percent increase from a year ago, the median home price fell 3.9 percent from January 2011, to $122,000.
In the South, existing-home sales rose 3.5 percent from December to January but were unchanged from a year ago. The median price in the South was $134,800, down 0.3 percent from a year ago.
Existing home sales were up 3.4 percent from December to January in the Northeast, and up 7.1 percent from a year ago. At $225,700, the median price in the Northeast dropped 4.2 percent from January 2011.

Housing Hope?

Check out this video... 

Housing Hope?

Have a great day, Sindy