Economy Could Dampen Commerical Market
Author: Diana Heeb Bivona Annual rental rate growth, projected at 6.3 percent in 2006, to moderate to 4.4 percent in 2007.
The U.S. apartment vacancy rate to be at approximately 5.5 percent at the end of 2006.
Rental rate growth will about 4 percent this year, but slow in 2007 to about 3.6 percent.
Shopping centers are having a harder time. At the end of the second quarter, vacancy rates stood at 6.8 percent. With more than an additional 25 million square feet of the 35 million square fee constructed by the end of the year, vacancy rates are expect to climb 20 basis points.
Real estate research company Reis Inc. is predicting that the U.S. commercial real estate market will end 2006 with impressive rent growth and vacancy declines, but a weakening U.S. economy could dampen the market in 2007. Real estate rent growth and vacancy rates have been increasing since late 2004, and have intensified this year. Restraints on construction and more disciplined construction lending are credited with the growth.
Looking forward, Reis expects: