Not a lot of change. That was the theme of real estate firm J.P. Weigand & Sons’ Forecast 2013, which was held Tuesday at the Hyatt Regency Wichita.
Jerry Gray, vice president and general manager of Weigand’s commercial/investment division, said the way to characterize business in the real estate industry in 2013 is what he generally says when he’s asked out and about in the community: “Not bad.”
“The markets are improving, and we expect this to continue,” Gray said of the overall forecast.
The office space sector has generally been what Gray called a “shuffle” market – tenants moving from one space to another with little expansion of office space users. Weigand’s forecast said Class A office properties (those of the highest quality) coming online this year will be readily absorbed by the market, while lower class properties will continue competing for tenants, especially Class C office space. The office space vacancy will be 17.6 percent, similar to 2012, the forecast said.
Retail space will see steady improvement with continued openings of new, national retailers. But new strip center construction will be limited. The vacancy rate is expected to be 13.8 percent.
The market for industrial space started to improve in 2011 and continued in 2012, Gray said. But the lack of acceptable inventory — 20-foot-high ceilings and 20,000-square-foot and larger spaces — “is starting to be an issue” in the market, Gray said.
He said it bears watching to see if demand in 2013 is sufficient to prompt additional speculative industrial building. The vacancy rate in industrial is expected to be 19.5 percent, the forecast said.
Texas A&M real estate economist Mark Dotzour, the event’s keynote speaker, said he’s bullish about the national economy in 2013, and thinks a “real” economic recovery has been under way since the third quarter of 2011.
“A real economic recovery is when people buy houses because they want to,” he said. “A real economic recovery is when people buy a new car because they want to.”
He said more people are working, housing markets are stabilizing, and there is five years worth of pent-up demand among Americans who want to spend – and they now have the credit capacity to spend.