The commercial real estate market saw its long-term vacancy improvement trend stall out as two sectors tied to the business side of the economy--office and industrial properties--showed essentially no gains in occupancy during the fourth quarter of 2007, according to Boston-based CBRE Torto Wheaton Research (TWR).
The industrial sector ended the year at the same 9.4 percent vacancy rate it began with, and the office sector's vacancy rate fell 10 basis points to 12.5 percent, noted TWR.
However, consumer--related commercial real estate-retail centers--saw a significant rise in vacancy over the course of 2007, moving from 8.7 percent during the fourth quarter of 2006 to 9.8 percent in the fourth quarter of 2007, according to Raymond Torto, principal of CBRE Torto Wheaton Research.
"The fourth-quarter results are consistent with our expectations," said Torto. "The outlook is for more of the same in the first half of 2008, but long-term, we expect these sectors to perform well for investors."
The office market has seen vacancy rates decline since the second quarter of 2003--about 4 1/2 years--and the industrial market has been consistently improving since the first quarter of 2004, noted Torto.
Vacancy increases in both the office and industrial sectors show larger increases in those markets that have been strongly affected by the recession in housing. In Orange County, California--the home of many subprime lenders--the vacancy rate for both the office and industrial...