Commercial real estate markets are thriving today, and officials with Avison Young expect this positive trend to continue throughout 2019. That's the good news in the company's recently released 2019 North America, Europe and Asia Commercial Real Estate Forecast.
"While the last few weeks have certainly been a rollercoaster ride for the world's equity markets, the headline is: We continue to feel very positive about opportunities in the real estate environment for the year ahead," said Mark Rose, chairman and chief executive officer of Avison Young, in a written statement.
Avison Young’s reported tracked 46 U.S. office markets totaling 5 billion square feet of inventory. As the end of 2018 approached, the overall national vacancy rate in this sector stood at 12.1 percent, down 20 basis points when compared with the end of 2017.
Several markets in the Midwest saw especially low vacancy rates in the office sector, including Nashville, with a vacancy rate of 7.1 percent, and Columbus, with a vacancy rate of 7.7 percent. Chicago had an office vacancy rate of 11.8 percent, Cleveland 8.6 percent and Detroit 9.8 percent.
Avison Young said that the industrial market remains the hottest in the United States. The inventory in this market increased by 2 percent after nearly 200 million square feet of new industrial space was delivered in 2018, according to Avison Young. But leasing demand was strong enough to keep the sector’s vacancy rate flat at 5 percent. Demand from e-commerce, not surprisingly, was behind most of this increase in construction and speculative development. Chicago now has more than 18 million square feet of industrial space under construction.
Overall, the U.S. construction pipeline near the end of 2018 was 19 percent larger than at the end of 2017.
Several Midwest markets were seeing significant industrial construction at the end of 2018. In Cleveland, about 2.1 million square feet of new inventory was delivered in 2018, Avison Young said. Developers expect to add another 4 million square feet here in 2019.
In Columbus, Ohio, industrial deliveries are expected to increase in 2019 to 2.3 million square feet. And Avison Young reported that the Detroit industrial market is challenged by a shortage of quality product. Among the challenges faced here is the slowdown in the auto industry.