February 10, 2012

Four on Friday: More Positive CRE Stats


As we discussed a while back, we’re catching wind of more and more indicators demonstrating that both the economy in general and commercial real estate in particular are on the mend. The progress may not be proceeding at the pace we all want, but it is steady and is much-welcomed news after the past few years.

Below are four more positive real estate stats that caught our eyes in recent days:

• The national warehouse vacancy rate declined to 9.6 percent in fourth-quarter 2011, a decrease of 24 basis points from its third-quarter mark and an almost 80-basis-point drop from the same period in 2010, according to CoStar Group. Furthermore, net absorption for the U.S. warehouse sector was a positive 110 million square feet in 2011, the best showing since 2008.  

Still, asking rents for warehouses declined in 122 of the 210 markets tracked by CoStar during the fourth quarter. “Rents aren’t growing yet because the gap remains wide between the vacancy rate and the availability rate,” a CoStar report explained. “The former is based on space that is actually vacant, while availability is based on space being marketed by landlords who are anticipating vacancy. The availability rate remains above 14 percent.”

• Consumer spending for Valentine’s Day is expected to rise this year, which is good news for the nation’s retail sector. The average person celebrating the event will spend $126.03, according to the National Retail Federation (NRF). The amount represents an 8.5 percent increase from last year’s $116.21 and is the highest mark in the history of NRF’s decade-old Valentine’s survey.

“As one of the biggest gift-giving holidays of the year, it’s encouraging that consumers are still exhibiting the desire to spend on discretionary gift items, a strong indication our economy continues to move in the right direction,” said Matthew Shay, president and CEO of NRF, in a statement.

• In the National Multi-Housing Council’s (NHMC) most recent quarterly survey of apartment market conditions – conducted at the end of January – the council’s Market Tightness Index rose to 60, up from 52 in October 2011.

NHMC defines a “tight” market as one in which vacancies are low and rents are high. A score above 50 means that apartment markets around the country are getting tighter, while a mark below 50 means that, on the whole, vacancies are increasing and rents are decreasing.

Indices measuring sales volume and the availability of debt and equity financing also showed positive trends.

“In the face of an unprecedented virtual shutdown of development, the apartment market continues its strong recovery as developers play catch-up to the growing demand for rental housing,” said NMHC Chief Economist Mark Obrinsky in a statement. “Investors continue to view apartments as a preferred asset class in today’s environment and long-term demographic changes favor rental housing. However, we expect the pace of improvement in transaction activity to ease somewhat moving into 2012.”

• Rents for prime office space in the world’s major cities increased by 0.8 percent in the fourth quarter when compared to the preceding three months, according to a new report by Jones Lang LaSalle. Even better: the rents for such space were 6 percent higher at the end of 2011 when compared with one year earlier.

“The rental outlook for 2012 has been tempered by ongoing economic uncertainty, although we continue to expect positive rental growth in most major prime office markets – the notable exceptions being Hong Kong and Singapore,” the report said. Beijing, Toronto and San Francisco are expected to perform particularly well in the year ahead and could experience double-digit rent growth, according to Jones Lang LaSalle.

An eight-page PDF of the report can be downloaded here.

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