This week, the Mortgage Bankers Association (MBA) released its Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, and it's nice to read good news in forecasts by experts into the future of commercial real estate development in this country. It's been awhile as the nation, especially the Sunshine State of Florida, had to deal with the past few years' housing crises, banking scandals, and unprecedented industry financial valleys.
Mortgage Bankers Forecasting Good Things for Commercial Real Estate in 2013
According to the Mortgage Bankers Association, there will be a jump in the originations of commercial and multifamily mortgages of $254 billion this year. That's going to be higher than 2012 by 11%. It gets better: the MBA is forecasting this to be $289 billion two years from now, in 2015.
"2012 was a strong year for the commercial and multifamily mortgage markets, and 2013 is shaping up to continue the growth,” said Jamie Woodwell, MBA’s VP of Commercial Real Estate Research. “Despite a 21 percent decline in the volume of commercial and multifamily mortgages maturing this year, we expect origination volumes and the amount of mortgage debt outstanding will both increase. Our forecast anticipates Fannie Mae, Freddie Mac and FHA, as well as life insurance companies, will all continue to have strong appetites for making loans, and—coupled with growth in originations for CMBS—the total market will continue to expand.”
Meanwhile, MBA predicts that outstanding commercial/multifamily mortgage debt will exceed $2.4 trillion by the end of this year (2% higher than 2012) and over $2.5 trillion at year-end 2015.
Read and download the MBA Report here.
National Association of Realtors Commercial Real Estate Forecast for 2013
Meanwhile, the National Association of Realtors released its predictions for commercial real estate sectors in the United States a couple of months back in their Commercial Real Estate Outlook (CREO).
Among their forecasts, 2013 will see declines in vacancy rates as follows:
1.0 percentage point in the office market;
0.6 point in industrial;
0.2 point for retail;
0.1 point in multifamily.
The Realtors' Report also predicts the following in 2013:
Vacancy rates in the office sector are projected to fall from an estimated 16.7 percent in the fourth quarter to 15.7 percent in the fourth quarter of 2013....
Office rent is expected to increase 2.0 percent this year and 2.5 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 21.7 million square feet in 2012 and 49.0 million next year.
Industrial vacancy rates should decline from 10.1 percent in the fourth quarter of this year to 9.5 percent in the fourth quarter of 2013.
The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.3 percent; Los Angeles, 4.4 percent; and Miami at 6.5 percent.
Annual industrial rent is forecast to rise 1.7 percent in 2012 and 2.2 percent next year. Net absorption of industrial space nationally will probably total 93.4 million square feet this year and 89.6 million in 2013.
Retail vacancy rates are expected to ease from 10.8 percent in the fourth quarter to 10.6 percent in the fourth quarter of 2013. ...
Average retail rent should increase 0.8 percent this year and 1.4 percent in 2013. Net absorption of retail space is estimated to be 9.1 million square feet this year and 19.8 million in 2013.
The apartment rental market - multifamily housing - is projected to see vacancy rates decline from 4.0 percent in the fourth quarter to 3.9 percent in the fourth quarter of 2013; vacancy rates below 5 percent are considered a landlord's market with demand justifying higher rents....
Average apartment rent should increase 4.1 percent in 2012 and another 4.6 percent next year. Multifamily net absorption is likely to be 219,700 units this year and 234,600 in 2013.
Read the National Association of Realtors' report online here.
Image: Wells Fargo Center in Miami, Florida (Wikimedia Commons)