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The average property transaction in commercial real estate markets served by REALTORS® has been in the neighborhood of $1.6 million, significantly below the $2.5 million threshold typically used by major databases in compiling sales information. The markets for small commercial real estate properties (SCRE) under $2.5 million appear to be very different from those for large commercial real estate properties (LCRE) selling for more than $2.5 million—and sometimes much more. NAR has estimated that the SCRE market could be in the neighborhood of $50 billion annually, compared to the market for large buildings—which has averaged $360 billion and above in recent years. These appear to be distinctly different markets.
In terms of price, REALTORS® reported that commercial sales prices increased 4 percent year-over-year during 2014. Data for the LCRE market segment indicated a year-over-year price increase of approximately 21 percent. Taking a longer horizon approach, the differences in price growth have remained wide apart. Comparing year-over-year price growth rates for the two markets during the 2009-14 period illustrates the steep decline in valuations for assets in in the SCRE markets. Even with the recovery of the past two years, sales prices in the SCRE markets from 2009 to 2014 are still down 7.6 percent. Prices in the LCRE markets are up 1.1 percent.
More information on commercial real estate markets can be accessed here.
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