CRE Vacancy Rates

June Commercial Vacancy Rates have been released.

Office Vacancy Rates have been stable near 17.5% for the last 6 quarters.  With the poor employment report on Friday, no significant improvement in the vacancy rate can be expected this year.  While competition from buildings started in 2008/9 has been fierce, very few new office building starts have been announced which will keep supply at bay.  Any pick up in starts at this point won't show up as supply for a couple of years.

As anticipated Malls are still suffering from overbuilding during the boom.  It's hard to imagine much improvement for the strip malls.  As the consolidation continues within Regional Anchor Malls they should continue to attract the stronger strip mall tenants further weakening the Strips.  I expect the recent increase to Regional Mall vacancies to push up strip mall vacancies.

The star of the show continues to be apartments.  The single family bust pushed many previous homeowners into apartments.  This has resulted in a flurry of apartment building sales and previously designated condo sites to be either converted to, or, started as apartments.  As home prices begin to bottom out and new apartment supply hits the market vacancy rates should bottom in 2012.