Investments in commercial real estate in the U.S. have all but stalled as bank lending for commercial real estate has dried up, according to the National Association of Realtors (NAR).
"Although access to residential mortgages has improved, the opposite is true for commercial loans," Lawrence Yun, NAR chief economist, said. "We need liquidity for commercial mortgage-backed securities not only to free the market, but also to rollover existing debt."
Meanwhile, job losses have had a significant impact on demand for commercial space, Yun said. Office rent is expected to contract next year as job losses are reducing demand for space.
Vacancy rates are forecast to increase 16.4% in the third quarter of 2009. The highest reported vacancies are in Detroit, Phoenix and Dallas, currently at 20%.
According to the NAR, the industrial sector has been managing well due to strong exports, but is projected to decline as the global slowdown continues.
The retail sector vacancy rate continues to suffer as consumer spending declines. The retail vacancy rate is forecast to come in at 12.7% in the third quarter of 2009. Retail markets with the lowest vacancy rates are San Francisco; Orange County, Calif.; and Honolulu, with vacancy rates of 4.5% or less. Markets with the highest vacancies include Detroit; Columbus, Ohio; and Fort Worth, Texas, with vacancies of 15.6% or higher.
The apartment rental market continues to profit from weak housing sales. According to the report, vacancy rates for multi-family dwelling are forecast at 5.8%. Meanwhile, average rent is expected to rise 2.9% in 2008 and 2.8% next year.
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