WASHINGTON — Problems on Wall Street are creating tightening credit and slow economic growth, which is hampering activity in commercial real estate sectors, according to the National Association of Realtors’ (NAR) latest Commercial Real Estate Outlook.
“Although capital remains available for residential loans, the credit crunch is pronounced in commercial lending,” according to Lawrence Yun, NAR chief economist. “Combined with a slowing economy, the lack of credit is curtailing activity in the commercial real estate sectors. As a result, there’s been a slowdown in the net absorption of space, which is leading to higher vacancies and more modest rent growth.”
The NAR forecast for four major commercial sectors analyzes quarterly data in the office, industrial, retail and multifamily markets. Torto Wheaton Research provided historic data.
In the retail market, which includes coin laundries, rising costs for everything from food to energy costs have cut down on customer spending. This can force retail rent growth to turn negative in 2009, the report states.
Vacancy rates in the retail sector are expected to be 10.4% in the second quarter of 2009, up from 9.7% in the second quarter of this year. Average retail rent is estimated to grow 1.2% in 2008, then decline by 0.9% in 2009, compared to a 3.2% increase last year.
Net absorption of retail space in 53 tracked markets should shrink by 2.6 million square feet this year before rising 2.8 million in 2009, down from 11.1 million absorbed last year.