Over the last 3 months both the United States economy and commercial real estate market showed various changes. Below is a snapshot, or brief summary, of the changes witnessed in the previous three months.
Economic Policy Updates
Health Care – Campaign promises notwithstanding, changing the health care system without dropping a significant share of the privately insured from the system is proving more difficult than many assumed.
Tax Policy – Debate around the possibility of adopting the Republican House Tax plan for reforming the corporate income tax, with the feature of “border adjustment.” This would provide for a tax rebate for exports and for taxing imports.
Regulation – Businesses will likely face lower regulatory hurdles, but overall impact may be more modest than some expect. Eliminating regulations can be difficult and time-consuming, requiring careful action to avoid running into legal problems.
Trade – As of early March, the administration has not taken concrete actions on trade. Swift and significant actions could pose problems for economic activity and growth.
Brief Summary of the Unemployment Rate Q1 2017
The unemployment rate fell to 4.5 percent in March 2017 from 4.7 percent in the previous month. It was the lowest jobless rate since May 20017, as the number of unemploymed persons declined by 326,000 to 7.2 million.
Payroll Employment Additions
- Construction – 5 percent
- Government – 8 percent
- Leisure & Hospitality – 8 percent
- Manufacturing – 9 percent
- Financial Activities – 7 percent
- Transportation & Warehousing – 3 percent
- Education & Health Services – 13 percent
- Professional & Business Services – 47 percent
The Commercial Real Estate Market in Q1 2017
The commercial real estate market hasn’t boasted any change in the vacancy rates, but showed incredible changes in the rental rates. The retail market’s vacancy rates remained steady at 4.8 percent, while the rental rate is now $16.00 per square feet, which is a 1.8 percent increase from the previous quarter. The cap rate average of retail properties is 7.08 percent. Similar to the retail market, the office sector shows steady vacancy rates at 9.7 percent. The rental rates slightly increased at 0.5 percent, resulting in $24.44 per square feet, and a cap rate of 7.16 percent. Lastly, the industrial market followed the trend with steady vacancy rates at 5.3 percent. The rental rate had the second highest increase at 1.7 percent resulting at $6.14 per square feet. Finally, the cap rate average was in at 7.52 percent.