|By PR Newswire||
|February 28, 2014 12:28 PM EST||
WASHINGTON, Feb. 28, 2014 /PRNewswire/ -- Cassidy Turley, a leading commercial real estate services provider in the U.S., has released its February U.S. Macro Forecast, Look Through the Snow at the Fundamentals.
The report details winter weather's impact on U.S. economic data and the outlook for the economy and commercial real estate.
"The polar vortex, ice and snow storms in the South, colder than usual conditions in the Midwest, and a major drought in parts of California all contributed in skewing a variety of indicators from job growth to home sales to retail sales – and pushed them artificially downwards," said Kevin Thorpe, Cassidy Turley Chief Economist. "But we need to take into account the seasonal distortions and not lose sight of the economic trajectory that began taking shape in the second half of 2013. Real GDP grew by 3.7% in the last six months of last year, the strongest rate of growth in almost two years."
"Barring any exogenous shocks, we should see GDP return to that rate of growth once the odd weather cycle subsides," Mr. Thorpe concluded.
Highlights on the commercial real estate sector include:
Office: The office sector is evolving. Office buildings suited for the next working generation that places more emphasis on mobility and remote access, collaboration and openness, as well as on energy and efficiency are in high demand, and this type of space is typically Class A. In fact, in 2013 net absorption of Class A space was more than five times greater than net absorption of Class B and C space. In addition to divergences in building demand, office tenants are also downsizing. According to Commercial Real Estate Development Association's NAIOP Report, the average square foot per office worker was 225 in 2010; by 2012 it was 176 square feet, and is projected to shrink to just above 150 square feet per worker in the next five years
Industrial: Nearly every major metro in the U.S. reported above average industrial absorption rates in 2013. Data centers and large big-box distribution centers that cater to e-commerce, logistics, and retail, continue to be the primary demand drivers for industrial space. With industrial vacancy approaching pre-recession levels, and demand for space still going strong, we expect the next major construction wave to begin in 2014.
Apartment: The development cycle for new apartment buildings is in full swing. There are 162,000 new apartment units expected to deliver in the U.S. in 2014, and another 129,000 in 2015 – the most new product in 15 years. This has sparked concern that the multifamily sector is overbuilding. However, if one takes into account the demographics – echoboomers and babyboomers are now entering prime-rental stages – along with the fact that developers had been underbuilding homes relative to household formation norms by 40% for five straight years, the worries of overbuilding are mostly overdone. Certain markets will see vacancy jump over the next two years, but the elevated vacancy levels will be brief. In our baseline scenario, U.S. apartment vacancy will rise from 4.1% in 2013 to 4.5% by 2015.
Retail: Two trends are likely to become more pronounced – the competition of e-commerce sales with retail sales and diverging performance in the luxury, mid-market and bargain retail sectors. E-commerce sales currently comprise just under 6% of total retail sales. But the aggressive upward growth, which has averaged 12% each year since 2001, is expected to continue throughout the next decade.
Follow this link to download the full report.
About Cassidy Turley
Cassidy Turley is a leading commercial real estate services provider with more than 4,000 professionals in more than 60 offices nationwide. With headquarters in Washington, DC, the company represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $25.8 billion in 2013, manages approximately 400 million square feet on behalf of institutional, corporate and private clients and supports more than 24,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances its global service delivery outside North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets. Please visit www.cassidyturley.com for more information about Cassidy Turley.
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