The economic recovery is finally making a dent in some office vacancy rates. For instance, in San Jose — where vacancies topped 20% in the third quarter of 2003 — the office vacancy rate declined by 2.3% to 19.3%.

Markets with the Largest
Quarterly Decreases 3Q to 4Q 2003*

Metro	4Q 2003*	3Q 2003*	3Q % Change*
Long Island	11.6%	14%	-2.4%
San Jose	19.3%	21.6%	-2.3%
Westchester/Mid-Hudson, N.Y.	11%	13.1%	-2.1%
Stamford, Conn.	14.6%	16%	-1.4%
Boston	19.7%	21%	-1.3%
*Percentage point change
Source: CB Richard Ellis

Building location is most important when considering corporate relocation or expansion, according to a survey of corporate users of commercial real estate conducted by NREI and Coldwell Banker Commercial this winter. Employment costs, tax incentives, a skilled labor force and transportation issues were also cited as important by at least one-third of respondents.

At 22.9% vacancy, Jacksonville, Fla., holds the dubious distinction of having the highest industrial vacancy rate in the nation. Meanwhile, the New York industrial market is steaming: both Westchester and Long Island are at a mere 6.1% vacancy rate.

Lowest and Highest Availability Rates as of 4Q 2003

Westchester Mid-Hudson, N.Y.	6.1%	Jacksonville, Fla.	22.9%
Long Island	6.1%	Austin, Texas	22.8%
Mid-New Jersey	7.1%	Pittsburgh	21.4%
Northern New Jersey	7.8%	Boston	19.7%
St. Louis	8.5%	Las Vegas	18.2%
Source: CB Richard Ellis

Low interest rates have encouraged investor interest in real estate, and single-tenant retail provides a safe, low-maintenance investment. In addition, 1031 Exchange buyers are nearing the end of a traditional eight-year ownership cycle, according to Marcus & Millichap. This process depresses cap rates as more investors get involved — a trend that is expected to continue for at least the next six months, the firm predicts.

In the U.S., the number of single-person households is on the rise. By 2010, 28% of U.S. households will consist of one person. And according to Bureau of Labor data, more than 40% of one-person households will rent their residences.

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