In my March column, I indicated that office rents will bottom sooner than expected. Second-quarter results justify this prediction, but it is too soon to pronounce that office fundamentals have bottomed.
When will the retail sector recover? The answer depends on how recovery is defined. Property owners consider a drop in vacancies and a reversal from negative to positive rent growth as the first signs of a recovery.
In a surprising show of resiliency for the U.S. apartment sector, the national vacancy rate stayed flat at 8.0% in the first quarter, bucking the seasonal weakness in demand that apartment rentals have typically shown during the colder months of the year.
Despite the havoc that the past year wreaked on office rents and occupancies, the combination of limited supply growth and expected stabilization in the labor markets foreshadows a relatively quick return to positive rent growth.