Wednesday, December 12, 2012
3Q Commercial Report
Our forecast calls for real GDP growth to slow to a 1 percent pace or less during the final quarter of 2012 and the first half of 2013. The slowdown is primarily due to increased uncertainty, which has caused businesses, both large and small, to put off key decisions on capital spending and hiring. What little strength is present in the economy appears to be broadening. Residential construction is one clear area of improvement, and gains in homebuilding should ultimately follow through to commercial construction as well.
The sluggish economic recovery has kept commercial real estate in the slow lane. All property types have seen some improvement, thanks mostly to record low levels of new construction. Apartments have seen the greatest improvement, benefiting from increased household formations and tighter mortgage underwriting standards. Warehouse and industrial markets have also seen demand improve. Vacancy rates have improved much less in the office and retail sectors.