Business World

News headlines throughout major U.S. cities note record-high commercial vacancies, along with a decrease in the asking price for commercial rental space. As was predicted by several major real estate statisticians earlier this year, the next real estate bubble to burst is commercial properties.

Based on statistics compiled by Cushman & Wakefield (C&W), the commercial vacancy rate hasn’t been this high since mid-2005. C&W, a global commercial real estate brokerage and consulting firm, found that vacancy rates increased in 24 of the 32 major markets they surveyed.

Colliers International, a global commercial real estate service provider, noted that rental office space is becoming abundantly available. Nationally, office space vacancies in major business districts jumped from 12.5 to 13.74 percent in the second quarter of 2009. Suburban markets increased 1.95 percent to 16.28 percent. In addition, the firm found that the asking rent in major districts dropped by 3.2 percent during the quarter to an average of $38.25 per square foot. Average asking rent in U.S. cities overall, however, are now more often priced at around $25.00 per square foot.

Both firms note that the market has been pummeled by increased supply and a decline in demand due to the economic downturn. Executive Managing Director Maria Sicola asserted that elevated unemployment numbers translate into the reduced demand reflected in higher vacancy rates. More than 66% of 6.5 million square feet of newly constructed commercial space was still vacant at the end of the second quarter of 2009.

Michael Cohen, a research strategist for Property & Portfolio Research (PPR), stated that the firm’s expectation was that vacancies would reach historic highs in office, apartment and warehouse space in 2009. According to ING Clarion Real Estate Managing Director David Lynn, the hospitality market has been dealt the biggest blow with major cutbacks in business and leisure travel.

Most cities across the nation are experiencing a rise in commercial vacancies. Phoenix has a 17.4 percent vacancy, Chicago’s is at 15.4 percent, Washington, D.C. holds an 11.7 percent rate, Las Vegas exceeds 20 percent, Kansas City is higher than 18 percent, Providence, Rhode Island is now over 30 percent, and so on.

Along with the rise in commercial vacancies, insurance companies are becoming more concerned about liability associated with vacant real estate. Vacancies present additional risks not applicable to occupied real estate. Commercial insurance companies are encouraging owners of vacant real estate to minimize risk by implementing the following:

* Notify insurance company of vacancy, become informed and follow policy terms that apply to vacant property.
* Advise local authorities that property is vacant.
* Remove all combustibles, debris and any unnecessary materials from vacant property.
* Inform local fire department of materials left that could impair fire-fighting.
* Inspect property weekly, have someone watch the property or hire a guard service to daily drive by to observe property.

With real estate vacancy numbers not anticipated to see daylight for some time to come, this is wise advice, indeed.

Ki moved to Austin to attend college, and stayed to work in Austin real estate. He created a website encouraging buyers to search for Austin homes for sale. His site also has information on Austin Commercial real estate and general information and statistics on Austin real estate.

Article Source: http://EzineArticles.com/?expert=Ki_Gray

Similar Posts:

• The #1 Commercial Real Estate Market Myth
• How to Search Property Records Through Public Records
• Turkey leads the way for overseas property investors seeking refuge from the economic turmoil
• The Recession is Over, In Case You Hadn’t Noticed
• Is 2009 The Year of Real Estate Bargains?

read also related posts:

1. The #1 Commercial Real Estate Market Myth

   By Monte Lee-Wen There it was in the Wall Street Journal last week. The headline in the Real Estate Section blared, "Apartment Vacancy Rate Hits 22-Year High !" and I murmured to myself … here we go again. It just reminded me why newspapermen are NOT Real Estate Investors … they are just out [...]...

2. Real Estate Commercial Property

   The buyer’s market in real estate these days has created all types of real estate available for investors. One of these markets that are considered cheap and more affordable is the commercial real estate market. This can be one of the most profitable markets for investors, but many investors do not put much effort [...]...

3. The Next Big Crisis in Real Estate – Commercial Space

   In our hard-hit economy we’ve all seen the results of the housing crisis on neighbourhoods, homes emptied of residents and belongings, yards overgrown, and for sale signs peeking out of the knee high grass. We are reportedly on the verge of recovering from the residential real estate crash now and in the months to come, [...]...

4. Commercial Real Estate Loans – Still Closing!

   By far the most positive aspect of commercial real estate financing is now SBA loans.  Via the Obama Stimulus Package, SBA loan are still funding and the banks that are still in the market, are pushing all of their customers to go this route. For banks, the Stimulus Package increased the guaranteed portion of the SBA [...]...

5. Commercial Real Estate Loans – Still Closing!

   By far the most positive aspect of commercial real estate financing is now SBA loans.  Via the Obama Stimulus Package, SBA loan are still funding and the banks that are still in the market, are pushing all of their customers to go this route.    For banks, the Stimulus Package increased the guaranteed portion of the [...]...

6. Commercial Estate Agents in London and the UK

   With a challenging set of UK economic conditions, it might be thought that the role of commercial estate agents has diminished somewhat. This article intends to identify what role these agencies are playing in the rebirth of the good old days. That rebirth seem a good distance off, but the green shoots have to start [...]...

7. Financial Assistance To Buy Real Estate: Real Estate Loans Uk

   Are you a UK resident? Do you want to buy some real estate? Do you need a huge amount immediately for that? If yes, there is a solution for you. And the solution is real estate loans UK. Yes, if you are a UK citizen, real estate loans will help you financially in purchasing real estate. A [...]...

8. U.S. Real Estate

   Missouri Real Estate The quintessential Midwestern state, Missouri offers interesting contrasts. On one grasp, you have large cities such as St. Louis and Kansas City. On the other, rural farmlands and towns dominate the rest of the prospect. Economically, the state is dominated by agriculture and railroad industries although typical large businesses can be found in [...]...

9. Financial Assistance To Buy Real Estate: Real Estate Loans Uk

   Are you a UK resident? Do you want to buy some real estate? Do you need a huge amount immediately for that? If yes, there is a solution for you. And the solution is real estate loans UK. Yes, if you are a UK citizen, real estate loans will help you financially in purchasing real estate. A [...]...

10. Is 2009 The Year of Real Estate Bargains?

    Everyone has felt some of the impact of slumping real estate prices over the past two and a half years, from homeowners trying to tap into shrinking equity to commercial property investors seeing smaller returns and greater vacancies. As 2009 reaches the halfway mark, however, the case for real estate’s turnaround is becoming more and [...]...