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Index: Commercial real estate stays soft

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While some sectors of the U.S. commercial real estate market have been hurt by weak job growth, some are offering opportunities for business expansion, according to the Society of Industrial and Office Realtors’ Commercial Real Estate Index. Surveys for the index, which measures 10 variables, are conducted by SIOR, and the data is analyzed by the National Association of Realtors.

The index rose 2.8 percentage points to 41 in the second quarter, according to the release. A level of 100 indicates a balanced marketplace, the release said.

Commercial real estate development remains stagnant in all regions, according to the index, as 88 percent of respondents said commercial developments are virtually nonexistent in their markets. Other key index findings:
• Vacancy rates in the office sector are expected to increase between the second quarter of this year and second-quarter 2011 and ease later next year.
• Annual office rent should fall 2.7 percent this year and another 2.1 percent in 2011. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, is projected to be a negative 13.6 million square feet this year and then a positive 22.6 million in 2011.
• Industrial vacancy rates are likely to drop to 13.7 percent in second-quarter 2011 from 14.1 percent in the second quarter this year, and improve modestly as the year progresses.
• The multifamily housing market is benefiting from modestly higher demand.[[In-content Ad]]

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