NAR Commercial Members Optimistic About Business Creation Throughout 2016

By the nature of the profession, commercial real estate agents have a unique perspective on business creation as they play a key role in helping companies lease or own office space and commercial facilities. For that reason, the NAR Research team has surveyed its commercial membership each month from August to December 2016 to track whether businesses were opening or closing in their communities.

In each 30-day period, NAR commercial members were asked their perspective on three key questions related to business in their local markets, namely had they seen:

1. An increase of businesses opening in local communities in the last 30 days
2. An increase of businesses closing in local communities in the last 30 days
3. Net businesses opening and closing in local communities in the last 30 days

With regards to businesses opening, NAR commercial members were optimistic throughout the second half of 2016. Each month, more commercial members cited that they had seen an increase in businesses opening. In September, commercial members saw the most businesses openings at 50 percent, compared to 42 percent that said they had not seen an increase of businesses opening in their communities. August and December were also good months, where commercial members reported that they had seen an increase of businesses opening at 49 percent. Around the holiday season, November was the slowest month where only 43 percent of commercial members cited that they had seen an increase in businesses opening.

From August to December, 65 percent of commercial members cited that retail industries were opening in their communities, followed by the food and beverage industry at 61 percent, and health, medical, and dental industries at 41 percent.

When NAR commercial members were asked the second question—whether they saw an increase in businesses closing in their communities—the share that cited that there was not an increase actually grew over the five-month period. Specifically, in August 64 percent said that there was not an increase in businesses closing, compared to December where 73 percent cited that there was not an increase in closings in their communities. Commercial real estate agents were thus optimistic about business creation in their areas.

When we asked commercial members what the net ratio of businesses opening to closings in the five-month period, roughly half of commercial agents were said more businesses were opening (50 percent in August and 53 percent in December). Only a quarter said that openings to closing remained the same each month (25 percent in August and 28 percent in December).