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| President Barack Obama |
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| Ryan Severino |
ATLANTA, GA (Sept. 25, 2013) – Several years after the
recession ended, the commercial real estate landscape remains varied, with the
multifamily sector soaring and retail sector still the lagging sector.
Meanwhile, uncertainties over the federal budget and over the implementation of
the new federal healthcare reform law, known as “Obamacare,” could slow the
economy and the commercial real estate industry recovery as well.
Those were several of the points made during the most recent
episode of the “Commercial Real Estate Show” radio program, hosted by Michael
Bull of Bull Realty. Bull and his guest Ryan Severino, senior economist
at Reis, provided an enlightening view of the state of the commercial real
estate markets.
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| Michael Bull |
Topics included the performances of the individual property
sectors, investment sales, new construction, and the potential impacts of
Obamacare, rising interest rates and tapering of quantitative easing.
With a national vacancy rate of just 4.3 percent, the
multifamily sector remains “the star performer” of commercial real estate,
Severino said. A looming uptick in new construction, however, could cool off
the white-hot sector just a bit, he cautioned.
“You aren’t going to see demand pull back significantly, but
you are going to see greater competition from new supply in the next six to 18
months,” Severino said. “That is not going to cause vacancy to explode, but
we’ll probably drift higher in the next four to five years.”
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| Nordstrom, Chicago, IL |
On the other hand, the retail market continues to sputter
overall, but it’s not without its positives. “If you look at those
high-quality, Class A malls with anchors like Nordstrom and Neiman Marcus and
in-line tenants like Armani and Polo, those centers have held up pretty well,”
Severino said.
“If you get away from those sectors to the Class B+ and
lower-caliber malls, we haven’t seen demand bounce back because most consumers
have been a little more circumspect about their discretionary spending.”
The office market continues to be hampered by sluggish job growth,
but that could change starting next year, Severino noted. “Give it a year or
two,” he said. “With economic growth accelerating, I think you’ll see stronger
demand on the part of users of office space.”
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| Neiman Marcus, Dallas, TX |
The industrial sector “has a Goldilocks temperature to it
right now,” Severino said. “It’s not as hot as the apartment market, and it’s
not as cold as retail.” The national vacancy rate for the
warehouse/distribution subsector is 11.8 percent and 13.8 percent for the
flex/R&D subsector, he added.
Questions about the implementation of Obamacare are one of
several economic factors poised to impact property performance in the coming
months, Severino said, as business owners will remain hesitant to make real
estate and personnel decisions until the dust settles.
“Whether you like Obamacare or you don’t like Obamacare,
what I would really like to see them do is just settle on everything so that
the market knows where it stands, and [business owners] can make decisions
going forward,” Severino said.
“Even if you hate the law and you don’t like
what it’s going to do to your business, at least you can make decisions about
the future once you know for certain where you stand.”
For a complete copy of the company’s news release, please
contact:
Stephen Ursery
The Wilbert Group
404.405.2354
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