A new report out from Moody’s Analytics does not paint a rosy picture for the immediate future of America’s real estate and construction sectors. In a year that was supposed to have been record-breaking, real estate projects are estimated to move forward again at a pace that is slower than the recovery after the Great Recession.
Moody’s Real Estate Solutions’ senior economist, Thomas LaSalvia, wrote in the report: “We do expect this decline to increase in pace and ferocity over the next two quarters, with regional centers feeling more of the pain than neighborhood and community shopping centers.”
The report goes on to forecast that some of the construction delays, due to cancellations and disruptions, could last as long as 24 months.
In the second quarter of 2020, office construction produced a new 3.3 million square feet of space, which is a whopping 67% decline over that same period last year. In the apartment market, 24,409 new units were built, which was a 55% decline.
The good news for the apartment and retail sectors was that vacancy rates had been flat across the year, indicating that few of those spaces are emptying (though the impending renters’ relief funding may hurt that in the next few months). Still, office space vacancy increased by 10%, from a vacancy rate of 7% last year at this time to 17.1% this year.