NAR Sees CRE Recovery in '04-'05

Commercial property sectors are likely to see overall improvement through 2005, with vacancy rates in the beleaguered office sector dropping to 16.4% in 2004 from an estimated 17.7% this year, according to a National Association of Realtors forecast."Although the housing market has been booming, the commercial real estate market has been lagging," said NAR chief economist David Lereah. "The commercial real estate recovery has been taking some time to materialize because the growth in the economy hasn't translated into a stronger job market -- but that will improve and should be apparent a year from now with unemployment expected to drop to 5.6% by the fourth quarter of 2004." The Washington-based trade association is forecasting that net absorption of office space will rise to 114.3 million square feet next year from 37.9 million square feet this year. Net absorption of warehouse space is expected to fall to 55.2 million square feet from a projected 82.3 million this year; retail sector net absorption is expected to rise to 112.7 million square feet from an estimated 98.9 million square feet; and the multifamily sector forecast anticipates a drop in vacancy rates from 7.1% to 6.6%. The NAR can be found on the Web at http://realtor.org.