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HENRY B. LaTORRACA

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Vacancy rates expected to continue remaining low

| Nov 1, 2016 | Uncategorized |

People who are involved in commercial real estate development in California and around the country might be interested in learning that the market is expected to continue firming over the next three years. The information was culled from surveys of 51 analysts and economists from several prominent real estate companies.

According to the Urban Land Institute Center for Capital Markets and Real Estate, which conducted the survey, commercial vacancy rates are expected to either move lower or to remain low. This may lead to an increase in property prices and rents. Apartment vacancies are expected to remain stable. According to the survey, some slowing of the market is expected. The volume of commercial real estate transactions is expected to fall to $428 million in 2018 from its post-recession high of $545 million.

The rate of increases in commercial real estate prices is expected to slow to 5 percent in 2016 and 4 percent in 2017. This will likely result in fewer issuances of commercial mortgage-backed securities for calendar 2016 before rebounding in the following year. Industry experts indicate that increasing employment rates have led to the low vacancy rates and increased prices, and they believe that the REIT market returns and earnings growth should be solid for several years.

Commercial real estate development can be exciting and financially rewarding, but it is certainly not without risk. In addition to the need to secure appropriate financing for planned projects, developers need to be wary of zoning laws and other regulatory issues that could present hurdles. They thus may want to have the assistance of experienced counsel when embarking on a proposed development.

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