BACK ON TH
BY STEVE BERGSMAN
The United States’ recovery is now four years in the making and the unemployment rate has fallen to 6.1 percent, the lowest it’s been since 2008. Even the stock market is
looking good, closing above 17,000 for the first time.
However, not all pieces of the economic pie are looking salubrious.
Commercial real estate remains a bit of a laggard with national
office vacancies stagnant at 16. 8 percent in the second quarter
and the industrial market growing in fits and starts.
Perhaps that is why developers and capital sources that bankroll
real estate development have been so conservative coming out of
Back in Business?
Initially, the path of commercial real estate in this recovery
has been all about tenancy. New office or industrial product
has depended upon the specific needs of a singular company
— basically build-to-suits. This is a phenomenon that is not
to be dismissed, if your market indicates the national and/or
local economy is far healthier than it might have been just 24
The first builders to try the spec market are often local and
entrepreneurial, and if they hit that pot of gold which comes with
full occupancy, institutional developers follow.
Most cities didn’t start to see either office or industrial speculative
construction until last year, even when local vacancy rates dipped
far below 10 percent. There are still some cities in North America
where there is no speculative development, although build-to-suits have returned. The commercial real estate recovery has been