Commercial Properties Struggling, but Realtors Focusing on Positive Trends

While the commercial real estate market may not have fully recovered, National Association of Realtors (NAR) chief economist Lawrence Yun identified some developing, positive trends in the market that could eventually lead to recovery.

“With the momentum of a broader economic expansion and the recent creation of jobs, the commercial market is showing slight signs of improvement, said Yun at the “Economic Issues and Commercial Business Trends Forum,” during the NAR’s mid-year legislative meeting in Washington, D.C. “There will likely be weaker figures through 2010, but it’s important to keep in mind that commercial real estate almost always lags behind the economy by a full year.”

Although “we have turned the corner in terms of jobs, we still have a long way to go,” he continued.

However, he pointed out, the commercial market has seen a few improving trends in recent months. The market is experiencing an increase in transactions due to more distressed properties available, and prices are beginning to stabilize. Yun believes within the next year more lending will slowly become accessible to commercial property owners. But, despite some promising trends, the commercial market is still experiencing high vacancy rates and rent concessions. He expects to see vacancy rates bottoming out and rent rising by next year.

Yun also warned against some of the possible risks commercial practitioners may experience in the future, such as high interest rates and inflation, as well as increased taxes for commercial real estate investors.