Multifamily and Industrial Continue Positive Gains
Equilibrium of supply and demand driven by the renovation of existing projects continues to be a catalyst for growth across all sectors, particularly multifamily and industrial, according to an NAI Globaleconomic briefing.
Demand for online warehouses remains strong and is expected to push vacancy lower in the industrial sector. Meanwhile, multifamily construction is increasing with rents expected to remain above normal, but below the maximum.
“As the U.S. economy continues to improve, we are seeing a return to stability, especially with core properties with investors looking for high quality assets,” says Jay Olshonsky, president of NAI Global.
The office sector is steadily improving as deferred renovations from the recession reignite. With construction at record lows, office vacancy will continue to decline slowly as the job market strives to reach prerecession levels.
Overall, investors can look forward to 2015–2018 as 10-year CMBS loans underwritten between 2005 and 2008 begin to default and more properties become available.
“The U.S. commercial real estate market today is doing what we expect it to do in an era of political and capital market uncertainty,” says Peter Linneman, chief economist at NAI Global. “However, when we have more clarity than uncertainty, we could see stunning economic growth reminiscent of the 1970s-80s and post-World War II.”