NAR commercial members work with small businesses in their local communities all over the country. Often REALTORS® can provide an ear to the ground for what’s happening in local economic development as they are one of the first sources to help companies buy, sell, lease, and manage property that enable businesses to operate and grow. In the 2016 Commercial Member Profile, we asked commercial members to give us a pulse on their cities and towns.
A majority of commercial members were optimistic and saw economic growth in their areas. We asked members if they have seen an increase in new businesses opening in their communities. Seventy-five percent said they had seen new businesses opening around them, while only 20 percent they had not seen new companies open, and five percent did not know.
Failure is a part of economic development, identified by companies shutting their doors. It is normal to have some businesses close in the face of competition. The important thing to measure if there is a steady increase in closures, then market conditions may be unfavorable to economic growth. Next we asked if commercial members had seen an increase in businesses closing in their areas. Roughly half (56 percent) said they had not seen an increase of companies closing, compared to a third (36 percent) that said there was an increase in businesses closing.
As for the market conditions of local companies in the last year, more commercial members were optimistic of growing local economic development. When asked their view on the net ratio for the number of businesses opening closing, 63 percent of members said that more businesses were opening in their areas than closing, 18 percent said the ratio had remained the same in the last year, and 13 percent said more businesses were closing than opening.
The data found above was the same across all firm sizes, roughly three-fourths of commercial members across all firm sizes said there was an increase in businesses opening in the past year and roughly two-thirds said there were more businesses opening than closing in their communities.
Last, we cut the data by population size in which the commercial member operates. We see an upward trend in the data where more businesses are opening in larger cities. When asked if there was an increase in businesses opening, 63 percent of commercial members in regions with less than 49,999 people said yes compared to 84 percent of commercial members in areas with 2,000,000 to 3,999,999 million people. Similarly, 46 percent of commercial members in regions with less than 49,999 people said more businesses were opening than closing compared to 70 percent of commercial members in areas with 2,000,000 to 3,999,999 million people. The trend illustrates that business is growing faster in more densely populated areas.
NAR will continue to take a pulse on economic development from its commercial members throughout the year. Stay tuned for more info!