RCA in the commercial property press:

The Future of Commercial Demand

Realtor Magazine reports: Demand Leaders

Whenever recovery comes, it won’t arrive evenly. Though it seems that demand for every commercial property type fell simultaneously, not all property types will recover on the same timetable, says Robert White, president of Real Capital Analytics. Multifamily will be the first to come back, in part because "it hasn’t fallen as hard. Fannie and Freddie were backstopping the debt," he says.

Yun is also "bullish" on multifamily. He points to the recent slowdown in household formation as an indicator of pent-up demand. A growing number of Generation Y renters, born between 1977 and 1994, will help multifamily demand, as will foreclosed home owners who’ll need to reestablish credit.

Office space is harder to call, in part because job recovery will differ by occupation. A few fields, such as health care, should remain relatively strong. "Health care employment is going to lead us as we go forward and provide opportunities to develop medical office and ambulatory care sites in the community, away from hospitals," says Redmond.

The federal government is another source of demand. "The only sure office bet seems to be the D.C. office market," says White. State government is less sure as many struggle with falling revenues.

Educational institutions, especially private universities and vocational schools, are another bright spot for office landlords. "There must be a dozen private colleges leasing office space in our market," says Robin Webb, CCIM, Coldwell Banker Commercial NRT in Orlando. Laid-off workers, retired workers seeking second careers, mid-career workers who need to learn new skills, and Generation Y is helping to fuel this trend.

Technology may be another recovery leader, the Federal Reserve predicted in its Beige Book released in July. "We’re showing a lot of space to start-ups. It’s a positive sign and will pay dividends, but it’s not absorbing significant amounts of space," Collins says.

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Posted by: Ryan Bernard

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