NAR Forecasts Increased Multifamily Vacancies

Multifamily vacancy rates will be rising in the near future, according to the National Association of Realtors’ (NAR) latest quarterly commercial real estate forecast.

NAR predicts that the multifamily sector will be the only corner of the commercial real estate market to see increased vacancies over the next year, rising from 5.9 percent to 6.1 percent, as new apartment construction is completed. Among other commercial real estate segments, office vacancy rates are forecast to fall 1.5 percent to 10.4 percent over the coming year, while the vacancy rate for industrial space is expected to decline 0.7 percent to 8.7 percent and retail availability is predicted to drop by one percent to 10.5 percent.

"Tightening vacancy rates and rising rents are clear positive fundamentals, but commercial real estate property prices have been bid up too high and look to weaken in the upcoming months," said NAR Chief Economist Lawrence Yun. "Any further tightening in credit standards, which never fully normalized after the recession, would inflict the most pressure on the small and mid-sized businesses that mostly look to community banks and credit unions for commercial property financing. Not having the necessary access to capital could keep a lid on building and leasing activity and in turn keep the economy from getting closer to its long-term average of three percent growth."