Jones Lang LaSalle

Northern N.J. Among Country's Top RE Markets

The nation's commercial real estate markets are benefiting from rising demand for space, following record investment flows in 2005, according to the latest industry outlook from the National Association of Realtors (NAR).

Citing solid fundamentals, David Lereah, NAR's chief economist, said, "Vacancy rates are declining in all of the major commercial sectors, and rents are rising at healthy rates." He noted that rising U.S. employment and expanding international trade are largely fueling the demand for commercial space.

Investment in higher-quality commercial property, excluding deals valued at under $5 million, climbed 44% last year to a record $268 billion.
NAR forecasts that office vacancy rates, now at the lowest level since 2001, will drop to an average of 11% by year-end from 13.6% in the fourth quarter of 2005, while office rents are to rise 5% this year.

Currently, three counties in California--Ventura, Orange and Riverside--plus New York City and Miami are enjoying the lowest vacancy rates in the country, posting numbers of not more than 8.5%.

Meantime, the top suburban office markets for investment are Los Angeles, northern Virginia, California's Orange County, Dallas and northern New Jersey, according to NAR.
In the industrial sector, trade with China continues to drive heavy traffic at the nation's ports. NAR expects new industrial construction to climb 20% this year to meet distribution requirements and to replace aging structures.

The industry association forecast retail vacancy rates to fall to an average of 7.8% by year-end from 8% in the fourth quarter of 2005, with average rents rising 4% this year.
- Ki Kim