Many gurus have been forecasting that the next serious problem that the North American economies will face will be the deterioration – and possible outright collapse – of the commercial property and REIT sector. Many have been hopeful of a steady and continued economic recovery so that this commercial smattering may not actually happen. Today, in the WSJ, we see signs that things are not getting better.
OFFICE REAL ESTATE STILL IN DEEP TROUBLE
The U.S. office sector vacancy rate rose to a five-year high of 13.7% in Q3 from 10.5% a year ago, and as is the case now in the apartment sector, rental rates are deflating and deflating fast. Net effective rents nationwide have fallen 8.5% YoY, which is the steepest deflation rate since 1995.
Saverio Manzo
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