Sectors Show Improvement in 2Q11

The office, industrial, and multifamily sectors had strong gains in 2Q11, according to a recent CB Richard Ellis report. Office vacancy and apartments dropped 20 basis points compared to 1Q11, while industrial dropped 10 basis points. Retail, still challenged by the "cautious consumer," saw availability rise 10 basis points.

The strongest performers in the office market were also among the hardest hit by the recession. Vacancy rates dropped by 60 basis points in Phoenix, 80 points in Miami, and 110 in Orange County, Calif. Office vacancy rates fell in 34 of the 57 markets CBRE tracks. Downtown and suburban office vacancies fell 20 basis points to 13 percent and 18 respectively.

Industrial vacancy dropped for the fourth consecutive quarter and now stands at 13.9 percent. San Francisco, San Jose, Calif., and Seattle were among the strong industrial performers in 2Q11. The improving domestic auto market also helped Detroit's industrial sector to rebound.

Thirty-three of the 57 retail markets tracked saw higher availability, with the others either remaining flat or declining. Overall retail vacancy increased by 10 basis points to 13.3 percent. Year-over-year core retail sales increased 5.0 – 6.0 percent, giving retailers some reason for optimism.

Apartment owners have plenty of reason to be optimistic. The sector's 2Q11 vacancy rate was 5.4 percent, marking a 60 basis point drop from a year ago. According to the report, apartment demand is approach historical norms.