Northeast Demand Outstrips Supply

WHAT A DIFFERENCE a decade makes -- or even a year. Remember "see-through" buildings, free rent, and other rental concessions? Those days are gone.

According to the FDIC's Survey of Real Estate Trends, for the first time in the decade, demand for commercial real estate has outstripped supply. In fact, those seeing a tight market in the Northeast, now outnumber the few who believe an excess supply exists.

Even since this January, perceptions have changed dramatically. In January's survey, 34% saw an excess supply, while 17% saw a tight supply. By July, only 15% saw an excess supply and nearly twice as many, 28%, saw a market in the Northeast with a tight supply (excess demand).

The long-term trend is shown on the corresponding chart.

[Northeast Supply and Demand Chart 1993-98]

In 1993, 96% saw an excess supply. By January of 1996, however, this declined to 57%. Now, fewer than 15% see an excess supply. The Northeast region is now one of the tightest regions in the US.

Steve
Stephen Traub, ASA
Publisher, PVM ^SM

The author, Stephen Traub, ASA, is Chief Commercial Appraiser for Property Valuation Advisors, Newburyport, MA. He is a certified general appraiser in NH, ME and MA. He can be reached at 978-462-4347 or:
by e-mail: straub@shore.net