Commercial Real Estate Market Update:

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Commercial Real Estate Forecasted for Strong Growth

According to a new forecast released by the Urban Land Institute, growth for commercial real estate is expected through 2017. As outlined in the report, this particular sector of real estate should experience solid growth for the next three years, the longest period of time for expansion within the industry.

Since 2010, commercial real estate in the United States has been expanding, this following a significant downturn after the recession. However, from information gathered from the Urban Land Institute in Washington DC, industry leaders feel strong that the current boom will continue for some time.

Three Easy Years

As stated by William Maher with the institute, professionals in real estate are predicting another three years of smooth sailing. Based on the new forecast, there is a strong indication that the economy is recovering and market fundamentals doing well. Together, these factors create a positive project of the next three years.

In putting together the forecast, 43 of the top economists and analysts in the industry were surveyed. Based on the outlook report, demand for real estate, specifically next year, will reach almost double the annual average of the past 14 years. Although commercial real estate is expected to thrive throughout the country, Dallas in particular is expected to do well since this city is one of the top markets for commercial property.

In addition to Dallas, analysts also predict that Houston will do well through 2017, leading the way for new office building completions in 2014. In the forecast, both Dallas and Houston are also at the top of the list for the greatest office leasing markets next year.

The prediction for Houston is that for this year, there will be 11.5 million square feet of office building openings. For the Dallas/Fort Worth area, the number is lower at 6 million square feet but still quite impressive.

Strong Corporate Expansion

Throughout the Metroplex, corporate expansion is abounding. With this, average job creation and increase in office development is being driven above average. In the report, Marcus & Millichap said that campuses for Raytheon and State Farm in Richardson Texas, along with the headquarters for FedEx in Plano and the FAA facility in Fort Worth, will account for 50 percent of new supply in 2015.

Although the projects are secured, delivery is expected to spark a number of sizable move outs, which will create some vacancy fluctuations. A prime example of this can be seen with State Farm that is scheduled to vacate one million square feet of temporary office space and FedEx that will leave 200,000 square feet of space.

New York is another city that is doing incredibly well with commercial real estate, as is Miami and Chicago. Overall, commercial real estate, primarily in certain large Texas cities, is expected to have an incredibly strong three years. Although making predictions beyond that timeframe would be difficult, some professionals believe net office leasing space will continue to climb and reach beyond the three year period.