REALTORS®’ Commercial Markets Stabilize in First Quarter 2012

Commercial real estate in REALTOR® markets recorded broader stabilization trends during the first quarter of 2012. Based on the results of the April Commercial Real Estate Market Survey, overall market activity registered slight improvements compared with the fourth quarter 2011.

On the leasing side, activity rose one percent over the previous quarter. Vacancies declined for most core properties, leading to a lower level of rent concessions. The decline in rental rates also slowed, indicating markets in recovery. The majority of respondents indicated that tenants continue to seek smaller commercial spaces—there was an increase in demand for space in the 2,500-4,999 square feet.

Investment sales rose 3.0 percent from the fourth quarter. Also, 70.0 percent of REALTORS® reported completing a sales transaction during the fourth quarter. Compared with a year ago, sales also recorded an increase—up 8.0 percent. Prices continued their decline, by six percent compared with the fourth quarter. Cap rates declined for office, industrial and development properties, but rose of retail, multifamily and hotels.

The average transaction price remained steady at $1.1 million in the first quarter. Commercial practitioners continue to find financing as the top obstacle in closing deals, followed by the pricing gap between buyers and sellers.

For the full report along with regional details, click here.

George Ratiu, Director, Quantitative and Commercial Research

George Ratiu, Research Economist, writes regular economic columns and conducts research in the areas of commercial real estate, international investments, mortgage performance and foreclosures. He produces NAR’s Commercial Real Estate Outlook and manages quantitative surveys, including the Commercial Real Estate Quarterly Market Survey.

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