Economist Update on Commercial Market
Thought you all might enjoy an excerpt from a recent report by the National Association of Realtors chief economist Lawrence Yun. It’s his current market and outlook for the state of Florida. I included the Multifamily excerpt. Enjoy:
The apartment rental market ” multifamily housing ” is attracting risk-averse institutional investors. Of the record $98.6 billion spent in this sector last year, 40 percent of acquisitions were from institutional investors such as pension funds and life insurance companies. Private investors were equally active, accounting for another 40 percent of transactions.
Many potential first-time home buyers continue to rent, placing downward pressure on vacancy rates and upward pressure on rents. The number of new multilfamily units remains relatively high, due in part to the conversion of condo projects into rental buildings ” notably in the Washington, D.C., area and South Florida.
Multifamily vacancy rates should average 4.8 percent in the fourth quarter, down from 5.1 percent in the fourth quarter of 2007. Average rent is seen to rise 5.3 percent in 2008, up from a 3.1 percent increase in 2007.
Multifamily net absorption is estimated at 245,800 units in 59 tracked metro areas in 2008, up from 234,400 last year.
The current national vacancy rate is 4.7 percent, below the 5.0 percent level which is considered landlord’s market. The areas with the lowest apartment vacancies include Northern New Jersey, San Jose, Miami, Salt Lake City and San Diego, all with vacancy rates of 2.9 percent or less.
My brief interpretation of this reads that we are on the verge of the next Buyer’s market though institutional investors are in the game the individual and partnership investors are not far behind…
