Cracks in the Real Estate Economy?

The recent Survey of Real Estate Trends by the FDIC showed a few significant changes nationally.

The results showed that in mid-2000, 31% of respondents saw a tight office market. By the beginning of 2001, however, only 17% saw a tight office market. In the retail sector, in the middle of 2000, 18% saw a tight market. By the beginning of 2001, however, only 10% saw a tight retail market.

In the industrial sector, in mid-2000, 28% saw a tight market. By the beginning of 2001, only 12% saw a tight industrial market.

Moreover, the length of time to lease a property was observed to have increased. In mid-2000, about 11% of respondents reported that the time it took to lease space was greater than 6 months earlier. By the beginning of 2001, 17% reported that the time it took to lease space was greater than 6 months earlier.

Locally, similar signs are creeping in. Vacancies are increasing in the Boston office market, and north of Boston in the retail sector, vacancies are on the rise.

In Salem, NH, shopping center vacancies have increased to double digit territory to 12% from 9%. Vacant space in regional malls in Salem has also increased from 6% to 9%. In Nashua, NH, what was a full house in regional mall space now is 3% vacant. And Kittery, ME, historically a place with no vacant factory outlet space and with a waiting list for any space that becomes available, now has a ten year record high vacancy of 5% with six spaces vacant.

E-mail to straub@shore.net.