AUTHOR: Anthony J. Buonicore, CEO, The Buonicore Group
After growing at a solid pace in the first quarter, economic growth appears to have slowed somewhat during the second quarter, reflecting continuing difficulties in the Eurozone and more modest growth in Asia and Latin America. With the exception of the apartment sector, the unusually sluggish economic recovery has made for a painfully slow improvement in commercial real estate operating fundamentals and new construction activity.
On a positive note, the commercial real estate market continues to benefit from increasing liquidity and attractive financing rates. The low interest rate environment has played a major role in rising commercial property prices. To investors, the combination of lower interest rates and higher property values has made commercial real estate more attractive. Operating fundamentals continue to improve, at least slowly, across all property types with vacancy rates continuing to trend lower and rent growth higher.
Apartments remain the strongest market sector as vacancy rates continue to decline. Asking and effective rents are still increasing, but there are signs that improvements in fundamentals may be decelerating. Market conditions are tightening, with inventory constraints becoming evident due to strong demand and low supply. This has fueled the construction boom, with builders and developers seeking to take advantage of today’s supply constraints.
Continue reading this report to see what activity has been occurring in the office, retail and industrial sectors, as well as to identify market barometers on construction/new development, CMBS, REITs, lending and view lists of potential clients for environmental professionals to pursue.