© 2008 Coldwell Banker Real Estate Corporation. All Rights Reserved. NRT Mid-Atlantic 2008 Mid-Year...

© 2008 Coldwell Banker Real Estate Corporation. All Rights Reserved. NRT Mid-Atlantic

2008 Mid-Year Commercial Report

The Commercial Leading Indicator is made up of many different factors, which, when analyzed together, give a very dependable picture of the overall market.



Construction spending on commercial properties is only off slightly.



Unlike the residential market, the commercial market is largely dependant on job growth.



Overall, commercial sales volume is at pre-2006 levels.



Office building sales volumes are down to pre-2006 levels.



Industrial sales volumes are also down.



The retail market is also at pre-2006 levels.



Oddly enough, multi-family sales volume is down as well. This is due to the “shadow” rental market. Owners of residential real estate who cannot sell their properties are putting them on the rental market.



Commercial loan defaults are well under control at approximately 2.2%. This means that the fundamentals behind the deals are sound.



Nationally, office market numbers are sound. There are pockets of the country where vacancy rates are high, but in most parts of the country the office market is holding its own.



Office vacancy rates are up slightly, topping out at about 13.2% nationally. If certain under-performing markets, such as those in southern California, Florida and Michigan are removed, the vacancy rate declines.



Office rents are still growing, albeit at a slightly reduced rate than a year ago.



The industrial vacancy rate is remaining steady at about 9.6% nationally.



Industrial rent growth is down slightly, but holding strong.



The most recent numbers available for industrial cap rates are from the end of last year. Chances are, that if we looked at industrial cap rates today, they would be up from this level due to a decrease in prices.



Retail completions are down, but projected to increase by the end of this year. Absorption is down slightly, but still healthy.



Retail vacancy rates rose as the residential subprime meltdown heated up, but have recently begun to rebound, and are now actually falling.



Retail rental growth is down, but still positive. The lower rental growth rate is helping to keep the retail vacancy rate down.



As retail rental growth rates slowed, cap rates rose.



Multi-family completions are remaining steady, as is absorption.



Multi-family has the lowest vacancy rate of all the property types at the moment. This is obviously due to the foreclosure crisis the U.S. economy is now experiencing.



Strong demand for rentals has allowed rents to grow at the highest rate in years.

© 2008 Coldwell Banker Real Estate Corporation. All Rights Reserved. NRT Mid-Atlantic 2008 Mid-Year...

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