The Housing Chronicles Blog: 2011 Riverside-San Bern. Economic Conference Commercial Real Estate Section Now Online

Friday, November 4, 2011

2011 Riverside-San Bern. Economic Conference Commercial Real Estate Section Now Online

LinkMiss the 2011 Beacon Economics Riverside-San Bernardino Economic Forecast Conference on Thursday, November 3rd at the Riverside Convention Center?

You can still download the section on commercial real estate by clicking here or on the book cover to the left.

As in the past this section was authored by me and MetroIntelligence.

Here are the key points from that chapter:

  • Although vacancy increases for office space are now leveling off and little new supply is expected to add to the inventory overhang, the office sector in the Riverside-San Bernardino region will still take time to recover; look for vacancies to range from 19.0% to 19.5% and rent growth to remain under pressure for at least another year.
  • As in the office sector, vacancies in the retail sector have peaked and should begin to inch down as the economy recovers and very little supply is added; look for economic vacancies to fall by 20 basis points by the end of 2011; positive rent growth will be delayed until the end of next year.
  • After nearly tripling between 2006 and 2009, vacancy rates for the region’s industrial/warehouse sector have fallen for six consecutive quarters to below 8%, largely on the strength of tenants demanding big-box buildings; look for vacancies to continue trending toward 6.0% as rent growth ranges for the most part between 1.5% and 2.0% per quarter.
  • Based on commercial building permit values, many building owners are investing in additions or alterations to existing properties; for new development, during the second quarter of 2011, there were declines in building permits for all commercial sectors from the previous quarter.
  • With interest rates for 10-year U.S. Treasury bonds recently hovering close to 2%, cap rates during the second quarter of 2011 for all commercial property sectors look quite competitive by comparison, ranging from 7.26% for industrial/warehouse properties to 8.75% for retail space and 9.57% for the office sector.

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