A majority of markets continued to improve during Q2 2014, with 40 reporting declines in availability while nine remained unchanged and 12 showed increases.
The declines in availability were led by Fort Lauderdale (-110 bps), Las Vegas, Nashville, and Atlanta (each with 100-bps decreases). The decrease in Nashville more than erases the 70-bps increase reported during the first quarter. Large markets reporting healthy declines in Q2 2014 were Philadelphia (-60 bps), Boston (-40 bps), Los Angeles (-40 bps), Detroit (-40 bps), and Chicago--the nation's largest industrial market--fell by 30 bps.
"The improvement in the nation's industrial sector continues as the economic expansion matures and gains more traction," noted Mr. Southard. "Following a challenging start to 2014 for the U.S. economy, we foresee more robust growth going forward as business conditions remain fundamentally healthy."
CBRE's preliminary estimate is that the national industrial Availability rate will end 2014 at 10.7%.
Retail Market
Q2 2014's retail availability rate of 11.7% was down 20 bps compared to Q1 2014 and now stands 150 bps below the post-recession peak of 13.2%. 41 markets recorded declining availability rates in the second quarter compared to Q1 2014; 22 markets recorded flat or increasing rates.
Tampa, Raleigh, Philadelphia and Charlotte recorded declines in availability rates of at or over 60
bps in Q2 2014. Markets which recorded rising availability rates were Cleveland, St. Louis and Salt Lake City; each of these markets was 40 or more bps higher than in Q1 2014.
CBRE's preliminary estimate is for the availability rate for neighborhood and community shopping centers to decline to 11.0% in 2014.
Apartment Market
Preliminary data indicates that apartment demand continued to grow in Q2 2014, with the vacancy rate of 4.4%, a 20-bps drop compared to a year ago. The market remains tight by historical standards, with the vacancy rate below the long-term norm. The national apartment demand is now growing at a rate of almost 270,000 units or 1.9% on an annual basis, a pace that is stronger than what the market has seen historically, as well as during the last three years.
Vacancy rates declined in 38 of the 63 markets in CBRE's coverage. Markets with the biggest year-over-year declines in vacancy (80 bps or more) included Albuquerque, Jacksonville, Sacramento, Riverside, St. Louis, Fort Lauderdale, Atlanta, Cleveland, Las Vegas, Houston, Orange County and Ventura. The markets with the largest year-over-year increases in vacancy (50 bps or more) included Greensboro, Norfolk, Salt Lake City, San Antonio, Birmingham, and Greenville. Markets with the lowest vacancy rates (at or below 3%) included Oakland, San Jose, Portland, Minneapolis, Miami, Ventura, Boston, Providence, Newark, and Pittsburgh.
Effective rent growth continued to improve last quarter, but is still remaining in the 2.5-3% per year range in most areas. CBRE's preliminary estimate is that the U.S. multi-housing market vacancy rate will average 4.7% in 2014.
U.S. Commercial Real Estate Enjoys Strong Rebound in Q2
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