Friday, February 22, 2013
The Oklahoma City commercial real estate scene has outpaced the national market in recent years. However, it’s still important to track national market trends. Without question, the national market is in full recovery mode. National trends could affect Oklahoma City and Tulsa, dictating the directions of both markets.
The national apartment market continued to lead the recovery, as it has for the past few years. Statistics showed that national vacancy fell to 4.5 percent, an 11-year low at the end of 2012. This was down from 4.7 percent in the third quarter of 2012 and 5.2 percent a year earlier. The vacancy was the lowest since the third quarter of 2001, when national vacancy was 3.9 percent.
Apartment rents are also continuing their steady increase. Asking rents rose to an average of $1,097 per month from $1,064 a year earlier. Effective rents rose to $1,048 from $1,010 a year earlier. With the current strong demand for multi-housing, vacancy should continue to decline even with new construction coming online.
The national industrial market also experienced significant improvement in 2012. During the fourth quarter alone, vacancy fell 30 basis points to an average of 8.9 percent. Average rents increased 1 percent in 2012 to an average of $4.69 per square foot. National analysts said this data shows that the national industrial market has moved from recovery mode into full expansion mode, with 103.8 million square feet of absorption during the year.
While improvement in the retail market is slower than other property types, the growth is beginning to pick up pace. During the fourth quarter of 2012, regional mall vacancy declined to 8.6 percent, down from 8.9 percent a year earlier. Neighborhood and community shopping center vacancy fell to 10.7 percent, down from 10.8 percent in the third quarter.
Improvement is also being seen in the national office market, despite challenges in the national economy. During the fourth quarter, national office vacancy declined to 17.1 percent from 17.2 percent from a year earlier. Rents are also increasing. Data shows that both effective and asking rents increased 0.8 percent during the fourth quarter – the strongest performance in rents since 2008.
Darren Currin is an independent research analyst and consultant who specializes in Oklahoma City and Tulsa commercial real estate. He may be reached at (405) 476-0164 or firstname.lastname@example.org.