Realtors Group Sees Improving Commercial Market

Washington, DC, May 17, 2010--The commercial real estate market is showing a few signs of improvement, according to National Association of Realtors Chief Economist Lawrence Yun.

Yun identified some developing, positive trends in the market at the “Economics Issues and Commercial Business Trends Forum” last week.

“With the momentum of a broader economic expansion and the recent creation of jobs, the commercial market is showing slight signs of improvement,” said Yun. “There will likely be weaker figures through 2010, but it’s important to keep in mind that commercial real estate almost always lags the economy by a full year.”

The commercial market has seen a few improving trends in recent months. The market is experiencing an increase in transactions due to more distressed properties available, and prices are beginning to stabilize. Yun said he expects that within the next year more lending will slowly become accessible to commercial property owners.

Two commercial sectors showing the most promise are manufacturing and multifamily. Manufacturing activity and employment have risen recently and because household formation is also rising, the multifamily sector will likely fare the best during this economy.

Nevertheless, the commercial market is still experiencing high vacancy rates and rent concessions. “All real estate is local, but I expect to see vacancy rates bottoming out and rent rising by next year,” said Yun.