US commercial market has started this one a very strong note showing positive momentum in occupier demand despite the second rise in federal interest rates since 2006 and a new presidential administration, reported by Royal Institution of Chartered Surveyors (RICS) through a survey.
According to Q4 2016 RICS U.S. Commercial Property Monitor, the commercial property has been witnessing a positive vibe for rent throughout the coming year with a projected rate of 3 per cent in the prime office and multifamily sectors and 2.3 and 2 per cent in secondary multifamily and prime industrial respectively. However, the occupancy demand for the secondary office and secondary retail is decreased. But adding to positive trend, there can be seen the rise in investor demand across all sectors including international investors.
“There’s some uncertainty due to the Fed raising interest rates and bond rates increasing substantially after several years of very low rates, which will reduce the cap rate compression experienced over the past eight years,” says Michael Yovino-Young FRICS, president, Yovino-Young.
As the cap rate is increasing and predicted to rise for next 18 months, the economic condition will strengthen. Also, the US government has been active and come up with certain plans for all the financial sectors including investment market, banking industry and Wall Street.
The survey also shows the decline of occupier demand in New York including 1.5 per cent decline in the outlook for the all-property prime office average but investment inquiries and foreign interest have gone up in the last quarter. That suggests that the overseas buyers are more interested in renting office spaces.
Source: World Property Journal