With lackluster employment growth, third quarter fundamentals in REALTOR® commercial markets maintained a positive trajectory. However, the specter of government shutdown and the budget debate added headwinds to the market performance. The results of the October Commercial Real Estate Market Survey indicated modestly rising absorption and new construction, accompanied by changing vacancies.
Leasing activity increased 2.0 percent higher over the previous quarter. On the supply side, new construction maintained momentum, increasing 5.0 percent over the second quarter. Vacancies declined for industrial and hotel properties. Office vacancies inched up 9 basis points, to 17.8 percent, while retail availability rose 110 basis points, to 15.7 percent. Multifamily vacancy reached 7.3 percent, as new supply entered the market and the residential rental market added competition.
With sliding vacancies, landlords found fewer reasons to offer rent concessions. In addition, rental rates rose 2.0 percent during the second quarter. In terms of space requirements, tenant demand remained strongest in the 5,000 square feet and below, accounting for 70.0 percent of leased properties. Lease terms remained steady, with 36-month and 60-month leases capturing the bulk of the market.
For the full report along with respondent comments, please visit http://www.realtor.org/reports/commercial-real-estate-market-survey.
Commercial REALTOR® markets posted accelerating growth in sales and leasing activity during the fourth quarter of 2012. Based on the results of the January Commercial Real Estate Market Survey, commercial practitioners closed the year on a more upbeat note. Commercial REALTORS® rated business opportunities in the fourth quarter 6.0 percent higher than the previous quarter.
Commercial real estate in REALTOR® markets continued on a stabilizing path during the second quarter of 2012. Based on the results of the July Commercial Real Estate Market Survey, market activity at the national level posted improvements compared with the first quarter of the year.
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.
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