Finance & Mortgage

Commercial Real Estate Market: Moderate Expansion and Easing Prices Expected Within 2016

Positive movement in real estate is to be expected by 2016. As per National Association of Realtors, commercial vacancy rates have been declining over the past few months. These decreases however will eventually pave way to progress as it was reported that availability will resume within the following months up until next year.

As per PR NewsWire, NAR chief economist Lawrence Yun stated that commercial real estate would continually progress thus giving it a bright outlook in the future despite going through a rough road over the previous months.

"Temporary turbulence in the financial markets, a stronger U.S. 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."

Yu then added that several states in the South and West have progressed and displayed leading superb performance in job growth compared to the rest of the country. This increase is led by high demands for apartments that feature faster household formation and rent growth. A slight increase may be exhibited in vacancy rates, which is triggered by some areas states in which it's metro areas are expected to progress in terms of new construction.

"The best days for multifamily housing could be winding down as new construction has already surpassed historical averages, this sector has been the industry's top performer over the past several years as a result of younger households struggling to become homeowners and the demand for apartments far exceeding supply in many markets."

The website also added that even though occupancy and rents will continually increase by the year 2016, property prices are predicted to have a slight decrease as the Federal Reserve would raise the interest rates.

"Rising sales and investor optimism in recent years has pushed prices past their peak in many of the larger commercial markets, Investors - especially those abroad - looking for better yields will likely seek to invest their larger sums of cash in smaller markets and into lower-end properties."


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