| While pricing power is still on the tenants’ side, landlord concessions continue to dissipate—and this should lead to effective rent growth in ‘11, reports CBRE Econometric Advisors senior economist Gleb Nechayev. These trends are part of CBRE-EA’s new Annual Trends 2011 report, which also notes US multifamily vacancy rate is expected to remain relatively stable in ’11, ending the year at 5.8% before falling further to 5.3% over ’12. Gleb warns that own-to-rent conversions and falling home prices are downside risks for multifamily in markets most directly hit by the housing bust, while “a broader recovery is unlikely to be robust without stabilization in the housing sector and a dissipation of foreclosures.” | ||
| Hans Christian Andersen on Downtown | ||
| Downtown appears to be the ugly duckling of the Manhattan office submarkets in recent quarters, says Reis analyst Brad Doremus. Its office buildings are lagging behind their counterparts in the rest of Manhattan, at least in terms of vacancy improvement. Almost all other NYC submarkets have exhibited flat or declining vacancies in recent quarters, while Downtown offices continue to see vacancies climb for a fourth straight quarter, rising to 11.6% in Q3. Aside from a slight drop in Q4 ‘09, vacancies have been following an upward trajectory since Q1 ’08, when the sector hit its cyclical trough of 6.6%. The 11.6% is the highest vacancy in the submarket since reaching 12.5% in Q2 ‘06 (though this is not the highest rate for Manhattan submarkets). However, there's good news on the horizon: Reis doesn't expect the vacancy rate to rise much higher than 11.6%—if at all—so we should begin to see declines in ‘ 11. |
Multifamily Climb
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Brad Doremus
, CBRE Econometric Advisors
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