Recap: Fourth Quarter Commercial Forecast


NAR Research released this morning its final outlook for the commercial real estate sector in 2016.

Despite global and domestic headwinds and the likelihood of higher interest rates in the near future, the forecast for office, retail, industrial and multi-family space can best be described as “mostly sunny.” The U.S. economy showed promising growth in the third quarter and investors continue to find strong yields in secondary and tertiary markets.

However, the shortage of available inventory remains the number one concern for commercial Realtors®. As investors flock to many smaller markets, low inventory has caused prices to accelerate, with property values posting a 7.7 percent yearly advance in the third quarter.

Over the next year, landlords should expect firm demand for commercial space as Realtors® expect vacancy rates to be lower in all four major sectors.

For more insight and analysis on current and expected conditions, check out this great analysis (with charts!) from George Ratiu, NAR’s director of quantitative and commercial research.