An improving jobs market, coupled with an acute scarcity of new construction, will help boost the commercial real estate recovery in the United States in 2013, according to a new survey just released by the Urban Land Institute (ULI).
The report also reveals growing optimism about the stabilizing health of the commercial real estate market based on its steadily improving fundamentals. This recovering optimism is expected to entice more businesses to act immediately on their future need for more and/or better space based on anticipated growth in a recovering economy. It may even entice investors wary of other markets to put more of their money into commercial real estate.
“Survey results are better than they were in 2012,” says Stephen Blank, ULI’s senior resident fellow for real estate finance. “Overall, 45 out of 51 markets scored better than they did last year.”
Respondents to the survey—whose ranks included developers, lenders, investors, and business consultants—generally agree that these improved fundamentals should result in up-ticks in leasing, rental rates and pricing within all commercial real estate sectors in 2013 in spite of the still uncertain economic climate. Newly added jobs should slowly increase commercial property absorption and push down vacancy rates, especially in the office, industrial and retail sectors. True to the law of supply and demand, fewer vacancies will cause prices to climb.
Dennis Dahm, director of the Commercial Division of Michael Saunders & Company, has ample reason to share the optimism expressed in the ULI survey. “Interest and activity in all segments of commercial real estate throughout Southwest Florida is extremely high,” says Dahm. “This includes residential developers in search of all types of raw land, from small packages of infill parcels and residential development opportunities in our downtown corridors, to larger suburban tracts for new single family communities. Inquiries into buying or leasing value-added office buildings in preferred locations are also way up; and opportunities for prime industrial space are attracting heightened interest because of their incredibly low pricing.”
“Topping the list in our area is the intensifying demand for prime retail space,” adds Dahm. “Developers are chasing sites for the construction of fast food restaurants, automotive services, small specialty food and merchandise stores, mattress outlets and so on.”
Proof that commercial real estate buyers are doing much more than just looking now to buy later is evidenced by this year’s vastly improved level of sales volume. Through thru 9/30/12, agents from the commercial division of Michael Saunders & Company have achieved dollar volume sales that are up 105.5% over last year.
Like the residential sector before it, Southwest Florida’s commercial sector is finally in the throes of a sustained recovery. If you plan to start or expand a business in the not-to-distant future, now is the time to contact one of our many commercial agents to learn about the opportunities in commercial sales and leasing that will help hold down the cost of doing business for many years to come.