A MEASURE OF INDUSTRIAL STRENGTH
Despite the industrial sector's reputation for stability, the industrial vacancy rate increased for several major markets during the past year. Nationally, vacancies jumped from 9.1% to 10.1% between the second quarter of 2002 and the second quarter of 2003, reports Cushman & Wakefield. Meanwhile, Ontario, Calif., was one of few markets to show an improvement.
HEALTHY RETURNS FOR REAL ESTATE
Real estate remained a safe haven from the volatility of the stock market during the first quarter. The National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index, which tracks private real estate investment, has averaged a 7.14% return over the last year, compared with the S&P 500's negative 24.76% return.
| 1Q 2003 | 3Q 2002 | 1Q 2002 | 1Year | |
|---|---|---|---|---|
| NCREIF Property Index | 1.88% | 1.79% | 1.51% | 7.14% |
| S&P 500 Index | -3.13% | -17.29% | 0.29% | -24.76% |
| Lehman Government Bond Index | 1.07% | 6.66% | -0.63% | 13.41% |
| T-Bills (90 day) | 0.30% | 0.43% | 0.44% | 1.57% |
| Source: NCREIF | ||||
WHEN WILL THE HOTEL MARKET PERK UP?
Don't expect a turnaround in the lodging sector this year, warns PricewaterhouseCoopers and Smith Travel Research. The good news is that after three years of RevPAR erosion, researchers predict that the embattled sector will finally see some improvement in revenues in 2004.
| Occupancy | Avg Daily Rate** | RevPAR** | |
|---|---|---|---|
| 2000 | 63.4% | 3.4% | 6.2% |
| 2001 | 59.7% | -3.5% | -6.6% |
| 2002 | 59.2% | 0.8% | -2.4% |
| 2003* | 59.1% | 1.3% | -0.4% |
| 2004* | 60.7% | 3.9% | 4.5% |
| *forecast | |||
| **percentage change from prior year | |||
| Source: PricewaterhouseCoopers LLP, Smith Travel Research | |||
REBOUND IN DOWNTOWN MANHATTAN
Downtown Manhattan's office vacancy rate has dropped nearly 1% over the past year. Ken Krasnow, senior managing director and head of Cushman & Wakefield's New York office, cites significant leasing activity as the reason for the decline. Going forward, says Krasnow, the submarket's performance is closely linked to job growth.
| Manhattan | 2Q 2003 | 2Q 2002 |
|---|---|---|
| Vacancy | 12.5% | 11.3% |
| Rent Per Sq. Ft. | $41.12 | $44.46 |
| | ||
| Downtown | 2Q 2003 | 2Q 2002 |
| Vacancy | 12.6% | 13.4% |
| Rent Per Sq. Ft. | $36.36 | $40.15 |
| | ||
| Midtown South | 2Q 2003 | 2Q 2002 |
| Vacancy | 14.5% | 13.3% |
| Rent Per Sq. Ft. | $31.09 | $35.72 |
| | ||
| Midtown | 2Q 2003 | 2Q 2002 |
| Vacancy | 12.0% | 9.9% |
| Rent Per Sq. Ft. | $46.56 | $50.15 |
| Source: Cushman & Wakefield | ||
ECHO BOOMERANG?
Apartment owners take note: Nearly half of college students graduating in 2003 say they will return home to live after graduation — one-quarter of them for more than a year. Of 1,015 college students surveyed in 2003, 25% said they would live with Mom and Dad for one to six months, while 24% said they would live at home for more than a year.
| 0 Months | 38% |
| 1 to 6 Months | 25% |
| 7 Months to a Year | 12% |
| More Than a Year | 24% |
| Source: MonsterTRAK | |