National Commercial Real Estate Trends

By now it’s likely that you’ve seen our Commercial Real Estate market update videos, where we provide detailed information on the vacancy rate and rental rates in Long Island’s retail, office, and industrial markets.

Although we believe that it is most important to understand what the market trends are within your own surroundings, we also feel that it is key to be aware of what our nation’s commercial real estate market trends are as well.

Let’s first take a look at the U.S.’s overall vacancy rate.  In the CRE retail market, the vacancy rate dropped from 6.5% in Q1 2014 to 6.4% in Q2 of 2014.  This is a minimal change of just .1%.  However, any decrease in the vacancy rate is always positive and means that more space is being occupied today.  As for the office market, the vacancy rate decreased to 11.4% at the end of Q2 2014 from 11.5% at the end of Q1 2014; another slight yet positive number.  Lastly, the industrial market’s vacancy rate fell as well at the end of Q2 2014 from 7.9% to 7.7%.  As you can see, overall the U.S.’s vacancy rate is on the decline across all three markets.  This is a good sign for our strengthening economy.

Now for the rental rates, this is the price per square foot in a commercial space.  The rental rates in the CRE retail market increased from $14.64 in Q1 2014 to $14.81 in Q2 2014.  This increase is very positive and proves that with less space available to rent, the rental rates in the retail sector are able to increase- property owners are able to charge more.  For the CRE office market we also see an increase in the rental rate.  The rental rate for the office market increased .01% to $22.22 in Q2 2014; another positive increase.  Last we have the industrial market rental rate which increased from $5.39 per square foot in Q1 2014 to $5.44 per square foot in Q2 2014.  Again, the trend seems to be the same across all markets, and a positive one at that.

These are all good signs that our national economy is making a strong comeback.  With vacancy rates on the decline, meaning more space (retail, office, and industrial) being occupied, and with rental rates increasing there is more spending occurring which points to a thriving economy.

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