Absorption rates to improve across all property types in 2012
Net absorption rates in the U.S. turned positive during 2011 for all major commercial property types, according to CBRE Econometrics, which expects the trends to continue in 2012 on the heels of employment growth and then accelerate in 2013. The absorption rate is the percentage of units expected to be rented or purchased over a period of time. After a downturn across all property types, annualized apartment absorption turned positive at the beginning of 2010, office by mid-2010, industrial in 2010, and finally retail in mid-2011, analysts at Barclays Capital said. In the apartment sector, CBRE forecasts a 0.7% absorption rate in 2012 and then 1.2% in 2013. Office property, the company said, will experience a 0.6% rate in 2012 and 1% in 2013, while the industrial sector should see a 1.1% rate in 2012 and 1.5% in 2013. Retail property will have a 0.7% absorption rate in 2012 and then 1.2% in 2013. Grubb & Ellis (GBE) said the overall outlook for the office market is stronger for 2012. The real estate services firm also expects the industrial sector to experience increased demand this year with total net absorption of 110 million square feet. Net absorption rates usually follow employment growth. An exception came during the recent downturn when each property type outperformed relative to the levels of job losses suffered during 2008 and 2009. Given the positive net absorption across property types and almost no new construction, occupancy rates, or the number of occupied units at a given time, began to improve in the third quarter. According to CBRE, apartment occupancy rose 0.8% from a year earlier to 95%. Office occupancy increased 0.6% to 83.8%, while the industrial sector inched higher 0.9% to 86.3%. Retail, the only laggard, is down 0.1% from a year earlier to 86.8%. Write to Justin T. Hilley. Follow him on Twitter @JustinHilley.