Improvements to real estate markets could boost the recovery of the U.S. economy. Organizations want to be ready for the return of consumer spending and are making the necessary moves to position themselves within the market. As a result, the commercial real estate sector is expected to see steady improvement over the next year, according to the National Association of Realtors (NAR).
NAR’s quarterly forecast predicts that these shifts in the economy will contribute to a gradual decline of vacancy rates in the next year. The study estimates that rates will drop 0.6 percentage points in the industrial and retail sectors, while the office space market will see a decline of 0.2 percent in the next 12 months.
“Office vacancies haven’t declined much because total jobs today are still below that of the pre-recession level in 2007, but rising international trade is boosting demand for warehouse space,” said NAR Chief Economist Lawrence Yun.
Fewer empty units will push rents higher through 2014, according to the survey. Office rents should rise between 2.5 and 2.8 percent while retail space will jump as much as 2.3 percent next year. This real estate market improvement is good news for building managers, and having the right tools could help property management firms capitalize on new opportunities. Building management software lets companies accurately assess market conditions, which can provide insight into potential changes.
Of course, some areas are likely to see faster growth than others. Bloomberg reported that New Orleans is experiencing a revival of its property management sector. Citing research by Real Capital Analytics, the source stated that between January and May of this year, commercial real estate transactions totaled $424.7 million, up 41 percent from the $301.1 million for all of 2012.
New Orleans has been able to reinvent itself and attract new investors from the bioscience technology and media production industries. Bloomberg noted that the influx of new businesses have created demand for office and retail construction, helping the city fully recover from the economic losses inflicted by Hurricane Katrina in 2005.
“New Orleans could have easily hit bottom like Detroit, but instead all this money was coming in,” Matthew Schwartz, co-founder of Domain Cos., told the source. “It’s reignited and been giving rise to this entrepreneurial spirit in the city that’s fueling new businesses, new ideas and opportunities for developers like us.”