Commercial markets strengthening : Rooftop Views

Rooftop Views

Commercial markets strengthening

All we hear from the residential real estate market these days is doom and gloom. New housing starts are down, inventories are increasing, prices are falling and homes are taking much, much longer to sell.

But the commercial market is starting to turn around. A recent artcle from the National Association of Realtors Commercial Alliance paints a much rosier picture. They indicate rents in all sectors - except retail - are rising and vacancy rates are falling. Large institutional investors - pension funds and life insurance companies - are back in the commercial market in a big way after being absent for the past few years.

Areas of the country where the housing market seems to be hit the hardest are the same areas where the commercial market is taking off. Parts of California, Arizona and New York are seeing office vacancy rates drop and lease rates increase. These same areas - including Florida - are seeing lots of market absorption in industrial leases as well.

Apartment rentals are strong in the areas where the housing market is weakest. People who can't afford housing still have to live somewhere and apartment rentals are reaping the benefit. Because of this, apartment buildings are among the best sellers in the commercial market.

The hospitality market - hotels and motels - is finally starting to show an increase in occupancy for the first time since 9/11. This market may have taken the biggest hit over the past few years but room rates are starting to increase along with occupancy rates.

What does this mean to the average home buyer? Generally, if the commercial market is strong, the housing market will start to feed off of it. If investors are feeling good enough about the economy to put money into non-essential commercial buildings, investments in housing soon follow.

And if you're looking for a good investment, commercial property may be just the type of property you're looking for.