U.S. Office Vacancy Rate Dips to 16.2% in Second Quarter, Says CBRE

The national office vacancy rate continued to decline in the second quarter of 2011, dropping 20 basis points to 16.2%, according to CBRE Econometric Advisors (CBRE-EA). This was the fourth consecutive quarterly decline for the national office vacancy rate since it peaked at 16.8%.

Meanwhile, the national industrial availability rate dropped 10 basis points to 13.9% in the second quarter, reports CBRE-EA. This marks the fourth consecutive quarterly decline in industrial availability. (Availability is space that is actively being marketed and available for tenant build-out within 12 months.)

News on the retail front was more subdued. The availability rate for retail in the second quarter rose to 13.3%, 10 basis points higher than in the first quarter.

U.S. apartment demand continued to expand at a steady pace in the second quarter. The vacancy rate for the CBRE-EA nationwide same-store sample of 4.2 million professionally managed apartment units declined to 5.4% in the second quarter, moving the four-quarter trailing average down 20 basis points.

"The property sectors outside of retail are benefiting from the modest pace of economic recovery and muted construction activity," says Asieh Mansour, head of Americas Research for CB Richard Ellis. "The retail sector continues to feel the effects of a cautious consumer, hit by rising food and energy prices, as well as elevated rates of unemployment. Mounting competition from online shopping has also hurt demand for bricks-and-mortar retail.”

The weak June employment report somewhat negated the recent positive news from the manufacturing ISM index and improvements in the ADP data, adds Mansour. "The lack of meaningful recovery in jobs is a notable risk to property market fundamentals going forward.”

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