Lawrence’s office and commercial real estate markets show signs of picking up this year, according to a forecast presented Thursday by a Lawrence-based commercial real estate firm.

Grubb & Ellis|The Winbury Group assembled nearly 200 bankers, builders, developers and others at the Lawrence Arts Center for an evening presentation that combined national economic data, Lawrence employment trends and various real estate transactions to come up with a guardedly optimistic outlook for the industry in 2007.

“We’re seeing three-, five- and in some cases 10-year leases being inked,” said Kelvin Heck, an agency senior vice president and principal, in discussing upturns in the office market. “That’s a fundamental change in the community.”

Helping drive the positive tone: positive economic growth nationwide, but not enough to spur much likelihood of rising interest rates, said Bob Bach, national director of market analysis for Grubb & Ellis Co., the agency’s corporate office in Lawrence.

With the economy growing and money remaining relatively cheap to obtain, developers and businesses will find conditions favorable for investing, leasing and buying.

“It’s likely to be the best of all worlds in 2007,” Bach told the assembled crowd.

Among the market sectors analyzed during Thursday’s presentation:

¢ Office: Heck predicts that office vacancies will drop to about 13 percent by the end of this year, after climbing to 14.4 percent in 2006. The pending arrival of a regional crop-insurance office for Great American Insurance Co. – set to occupy about 19,000 square feet in the Wakarusa Corporate Centre on Wakarusa Drive – not only helps fill a large building in town, but also should help boost interest in Lawrence for future tenants, Heck said. “It adds to the credibility of Lawrence as a destination for regional-type office users,” he said.

From left, Marilyn Bittenbender, with Grubb & Ellis|The Winbury Group; Martin Moore, Advanco Inc.; Kelvin Heck, Grubb & Ellis|The Winbury Group; and Dale Glenn, with GLPM Architects Inc., visit during the sixth annual Grubb & Ellis|The Winbury Group Lawrence Commercial Real Estate Forecast Event. The gathering was Thursday at the Lawrence Arts Center, 940 N.H.

¢ Industrial: The sector already saw improvement in 2006, with vacancies dropping to 3.2 percent from 6.2 percent a year earlier and 9.3 percent in 2004. But the city’s most popular industrial area – along N. Iowa Street – has only 0.3 percent of its space available for lease, and the community has not yet secured significant open spaces for future industrial development, said Marilyn Bittenbender, also a senior vice president and principal for the Lawrence agency. She urged bankers in the crowd to treat loan applications for new industrial projects kindly: “Don’t be afraid of it. We need the space.”

¢ Retail: Retail vacancies remained at 5 percent in 2006, essentially unchanged each year since 2002, Bittenbender said. But a slight uptick in vacancies downtown – which ended the year with 6.6 percent of its retail space empty – hasn’t slowed interest from investors, whose willingness to pay well for properties continues to pose a threat to “mom and pop” stores in the central business district.

She expects overall retail activity to remain steady this year.