Published March 17th, 2010 by Mickey
Commercial Real Estate the Flip Side of Residential — for Now
But the market shows signs of slowing with the U.S. economy
LAS VEGAS – While the housing market suffers through one of the worst downturns in decades, the commercial property sector is thriving in many markets.
But economists see some signs of moderation in the commercial property business. And a slowdown in the U.S. economy could put the brakes on commercial building.
“Commercial typically follows the national economy,” said Lawrence Yun, chief economist of the National Association of Realtors, at the industry’s conference this week in Las Vegas.
To fill office buildings and warehouses, the economy needs to be strong.
That’s certainly been the case in North Texas and other U.S. markets.
Dallas-Fort Worth leads the country in job creation, and office and warehouse construction are booming.
Residential sales, however, have dipped in the last year.
“There are clearly different factors that drive residential and commercial,” Mr. Yun said. “When the residential market took off, the commercial market was in a slump.”
Now the tables are turned.
But Mr. Yun said leading indicators for the commercial property market are cooling as the U.S. economy loses steam.
“The economy is expanding, but not as strongly as before,” he said. “Some economists are actually forecasting for economic recession.”
Traditionally when that happens, demand for commercial property slows.
Continue reading from web.mit.edu