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Monday, November 10, 2014
Commercial property sector investment forecast to grow in 2015
National Association of Realtors
Commercial property investments in the U.S. are forecast to reach $420 billion next year.
But the property market has a ways to go to get back to the $571 billion in annual investments made in 2007 before the recession hit.
“We turned the corner about 12 to 18 months ago,” Lawrence Yun, chief economist with the National Association of Realtors told property brokers meeting from all over the country this weekend in New Orleans. “For 2014 we anticipate about $400 bilion of commercial real estate activity – still short of 2006 or 2007 levels.
“If you are a commercial real estate practitioner, you can expect better conditions in the next couple of years.”
The economic downturn sharply reduced commercial property market investments to only about $67 billion in 2009.
“When the great recession occurred, credit froze,” Yun said. “There was a bout a 90 percent reduction in business activity for the commercial sector.”
But now the market is recovering with commercial property activity and prices getting back closer to previous peak levels as the overall economy grows, Yun said.
“More jobs means more demand for office space, more demand for warehouses space, more demand for rental housing and more demand for retail space,” he said.
States with the biggest employment increases are seeing the best commercial real estate activity.
“Some states are doing much better than others,” Yun said. “The state of Texas is consistently in the top five.”
Yun said apartments and warehouses are getting the most traction in the market recovery, even though the industrial sector is often overlooked.
“Everyone can see office buildings,” he said. “Not everyone can see industrial buildings – they are behind the railroad tracks and not visibly pleasing.