Vicious cycle creates “huge supply crunch,” pushing home prices up
New York City and Honolulu are currently the two markets with the lowest office vacancy rates nationwide, both with vacancies around 9 percent, while all other markets have double-digit rates, according to the National Association of Realtors. Vacancy rates in the office sector are anticipated to decline to 16.4 percent in the fourth quarter of 2011 from 16.7 percent in the current quarter, but with very little change expected during the first half of the year. NAR also said that the U.S. commercial real estate market appears to be stabilizing, with modest improvements expected in 2011. “The basic fundamental of rising commercial leasing demand, resulting from a steadily improving economy, means overall vacancy rates have already peaked or will soon top out,” said Lawrence Yun, NAR chief economist. “The outlook for the office and industrial markets has moderated with modestly declining vacancy rates expected as 2011 progresses, while the retail sector should hold fairly steady. Still, high vacancy rates imply falling rents.” TRD
