According to the National Association of Realtors, tides are turning in the commercial real estate market. Money is "starting to flow into commercial real estate". Loan originations more than doubled from the first half of 2010 to the first half of 2011 (although they are still well below peak levels). REIT values were at an all-time high.
Office vacancies have drastically declined, more due to the lack of new product than the increase in rentals, but owners of Class A space are giving fewer concessions than a year ago. Tenants are still kings in the Class B and C markets. Retail space, which tends to fall with housing, had been very depressed, and is definitely on the way back now. Industrial space sales were up more than 50 percent, with the majority being warehouses. Hotels were the lagging performers, with average pricing on sales decreasing and average room rates increasing only slightly.
Multifamily property sales more than doubled from 2010 to 2011, and apartments are the highest performing category of commercial real estate. Effective rent per unit has bounced back to its peak, paving the way for building more capacity. Also, rents are on the rise, with vacancies and concessions declining. When this is combined in New Haven with the country's lowest vacancy rate, we can see this strong market continuing.
All in all, while improvement will be slow and steady, the future certainly appears brighter than the recent past, and should build upon itself as others are drawn to agree.
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