Employment boosts occupancy rates in us

Photo: Michael Tapp

Improving employment opportunities are boosting occupancy rates in the US, according to the National Association of Realtors.

National office vacancy rates are forecast by Realtors to decrease 0.8 per cent to 14.8 per cent over the coming year, thanks to continued job creation. The vacancy rate for industrial space is expected to decline 1.4 per cent to 9.7 percent, and retail availability to decrease 1.3 per cent to 11.3 per cent. With new apartment construction projects coming through the pipeline in several markets, only multifamily vacancies are forecast to increase over the next year, from 6.1 per cent to 7.3 per cent.

Lawrence Yun, NAR chief economist, says the outlook for the commercial real estate sector continues to look bright, despite multiple headwinds: "Temporary turbulence in the financial markets, a stronger US dollar hurting exports and economic weakness overseas chipped away at third quarter growth and led to some deceleration in the pace of commercial investments. The good news is that these deterrents are slowly residing, which should ultimately reawaken the growing appetite for commercial space heading into next year."

Regionally, several states in the South and West have outperformed the rest of the country in job growth over the past year. Led by strong demand for apartments from faster household formation and rent growth, metro areas in those states are expected to see elevated levels of new construction, which will lead to a slight uptick in vacancy rates.

Even though rising occupancy and rents will continue, meanwhile, property prices are forecast to decline slightly in 2016 as the Federal Reserve starts to raise interest rates. However, investments are still expected to continue on an upward trend.