Commercial Real Estate Trends & Outlook April 2021 - National Association of REALTORS Research Group
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Commercial Real Estate Trends & Outlook April 2021 National Association of REALTORS® Research Group
COMMERCIAL REAL ESTATE TRENDS & OUTLOOK April 2021 Report The commercial real estate market is recovering but remains weak compared to conditions before the COVID-19 pandemic, according to NAR commercial members who responded to the 2021 Q1 Commercial Real Estate Quarterly Market Survey and industry data. Acquisitions for large commercial real estate―properties or portfolios of at least $2.5 million ― fell 28% year-over-year in the first quarter of 2021, with transactions declining across all property types, except for hotel acquisitions. Investors could be acquiring hotels to convert into other uses such as multifamily housing. Among commercial members of NAR who participated in the quarterly market survey and whose acquisitions were typically properties or portfolios of less than $2.5 million, transactions declined by an average of 1%. Respondents reported an increase in sales of land and industrial properties and a decline in sales of other types of commercial real estate. Commercial real estate prices continue to firm up, but the value of commercial real estate is still broadly down by 6% compared to one year ago. A majority of NAR commercial members who responded to the 2021 Q1 commercial survey―70% ― reported that companies are leasing or moving into office with small square footage due to working from home. The commercial real estate market’s recovery will remain uneven in 2021. Commercial members of NAR who responded to the survey anticipate a modest increase in sales of land (5%), industrial warehouses (3%), and Class B/C apartments (1%), but anticipate a decline in sales transactions of retail, office, and hotel/hospitality properties in the next 12 months. However, commercial real estate transactions should experience a stronger recovery across all sectors in 2022 as more businesses operate at normal capacity, a larger fraction of the workforce returns to the office, and as business and leisure travel picks up strongly in 2022 with the broad swath of the population fully vaccinated, and assuming there is no resurgence of deadlier COVID-19 variants. Enjoy reading the latest report!
1 | COMMERCIAL SALES
Commercial Sales Transactions Down 28%
from One Year Ago Quarterly Sales Volume (YoY % Change)
as of 2021 Q1
As businesses continue to operate below normal 40%
capacity and with people and businesses still
20%
holding back on travel and recreation with
COVID-19 vaccinations still underway, 0%
commercial sales transactions continued to -1%
-20%
decline in the first quarter of 2021. -28%
-40%
Commercial transactions of $2.5 million and -60%
above decreased 28% from one year ago, -80%
according to Real Capital Analytics. Transactions
2018.Q1
2018.Q2
2018.Q3
2018.Q4
2019.Q1
2019.Q2
2019.Q3
2020.Q1
2020.Q2
2020.Q3
2020.Q4
2019.Q4
were down across all property types except for
hotel properties where acquisitions rose 13%.
Investors could be acquiring some hotels to be REALTOR® CRE Markets $2.5+M Market
converted into other uses, such as multifamily
housing. Apartment buildings accounted for a
third of the closed transactions. $2.5 Million or More Transactions
Q1 '21
In the small CRE market where transactions are
less than $2.5 million, NAR commercial Vol ($b) YOY
members who participated in the 2021 Q1 Office 20.5 - 36%
Commercial Real Estate Quarterly Survey Retail 7.8 - 42%
reported that their sales transactions volume in Industrial 19.6 - 41%
the first quarter of 2020 contracted on average
Hotel 5.6 13%
by 1% compared to the level one year ago.
Respondents reported an increase in Apartment 35.5 - 12%
acquisitions for industrial properties and all Seniors Housing & Care 3.3 - 8%
types of land, with strong growth in sales of Dev Site 4.3 - 40%
residential and industrial land. Total 96.7 - 28%
Real Capital Analytics
YoY % Chg of Land Sales Among NAR YoY % Change in the Dollar Commercial
Commercial Members in 2021 Q1 Sales Volume in 2021 Q1 Among NAR
7% Commercial Members
5% 6%
4% 4%
3%
2%
1% 2%
1%
3%
2%
1%
0%
-1%
-1%
-2% -2%
-3% -3% -3%
-4%
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics
31 | COMMERCIAL SALES
For deals of $2.5 million or more, Boston,
Dallas, Los Angeles, Atlanta, and Phoenix Commercial Transactions of $2.5M or
closed the most deal volume in the first Over Closed in 2021 Q1 in Billion Dollars
quarter of 2021. Except for Boston, the top
five markets are all non-gateway cities. Boston $6.6
Dallas $5.8
In Boston, the bulk of the deals were for Los Angeles $4.7
office properties. In Dallas, Los Angeles, Atlanta $4.3
Atlanta, and Phoenix, a large component Phoenix $4.3
was for apartment properties. Seattle $2.8
Houston $2.6
Distressed Sales at 2% of Total No NJ $2.2
Transactions Chicago $2.2
Austin $2.2
Among transactions of $2.5 million or over, San Francisco $2.0
distressed sales accounted for less than 2% Denver $1.9
of sales. Despite the rise in vacancy rates, Miami/Dade Co $1.8
there are little distressed sales compared to East Bay $1.6
the Great Recession when distressed sales Manhattan $1.6
made up nearly 20% of sales. One reason is San Jose $1.5
that investors like REITS are less leveraged Baltimore $1.5
this time compared to the Great Recession. Inland Empire $1.5
During the Great Recession, the debt to Orange Co $1.5
total market capitalization (debt plus San Diego $1.4
equity) of equity REITS market hit a peak of Charlotte $1.3
57.5%.1 As of March 2021, the debt to equity Orlando $1.2
ratio is at 32.3%, according to Nareit.2 DC VA burbs $1.2
Tampa $1.1
Palm Beach Co $1.1
Distressed Sales as a Percent of Total Portland $1.1
Sales of Properties $2.5 Million or Over Richmond/Norfolk $1.1
25.0% NYC Boroughs $1.0
Salt Lake City $1.0
20.0%
Real Capital Analytics
15.0%
10.0%
5.0%
1.8%
0.0%
07Q1
09Q1
13Q1
08Q1
18Q1
15Q1
11Q1
12Q1
14Q1
21Q1
10Q1
16Q1
17Q1
19Q1
20Q1
Real Capital Analytics
1 Nareit, https://www.reit.com/news/blog/nareit-media/equity-reits-have-lowest-debt-ratio-20-years
2 Nareit, https://www.reit.com/sites/default/files/2021-04/MediaFactSheet_Mar-2021.pdf
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics
42 | COMMERCIAL PRICES
Commercial Prices are Recovering But
Still Down 6%
Y/Y % Change in Commercial Property
Commercial real estate prices continue to Prices
firm up, but the value of commercial real 10.0%
estate is still broadly down by 6% compared 6.7%
5.0%
to one year ago, based on the Green Street 2.0%
Commercial Price Index, an appraisal-based 0.0%
index of the properties held by REITs. The
-5.0% -5.6%
decline has tapered off from the 10% decline
in the second quarter of 2020. -10.0%
-15.0%
Among closed transactions valued at $2.5
2019.Q1
2019.Q2
2019.Q3
2019.Q4
2020.Q1
2020.Q2
2020.Q3
2020.Q4
2021.Q1
2018.Q1
2018.Q2
2018.Q3
2018.Q4
million or over, sales prices rose 6.7% from
one year ago, according to Real Capital
Analytics.
REALTOR® CRE Markets % Chg Y/Y
Among closed transactions of NAR $2.5M+ Market
commercial members which are typically Green Street
below $2.5 million, sales price rose by 2% on
average. Respondents reported strong
price gains for land (+6%), industrial
warehouses (+5%), and class B/C apartments YoY % Change of Sales Prices of
(+5%). Sales prices of residential land were Commercial Acquisitions Typically
up 9% on average, according to NAR Below $2.5 Million in 2021 Q1
commercial members.
6%
5%
5% 5%
YoY % Change in Land Sales Prices in 3%
2021 Q1 For Properties Typically Below 2%
2%
$2.5 Million
9%
-1%
-1%
6% -2% -1%
6%
5%
4% 4% -4%
4% 4%
3%
2%
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 52 | COMMERCIAL PRICES
Cap Rates on the Decline
As commercial prices continue to firm up, cap Cap Rates in 2021 Q1
rates continued to decline. Apartment
acquisitions had the lowest cap rate of 4.9%, Properties $2.5 M or More
followed by industrial at 5.9%. Hotel properties Office 6.6%
had the highest cap rates, at 8.6%. Office cap rates Industrial 5.9%
were at 6.6% .
Retail 6.7%
Risk spreads (cap rate less 10-year T-note) for Apartment 4.9%
office, retail, industrial and hotel have also
trended downwards and cap rates are now at
Hotel 8.6%
about the same level in 2021 Q1 compared to one Seniors Housing & Care 7.0%
year ago. However, the market is still thin so these Source: Real Capital Analytics
cap rates reflect transactions that are likely of
prime properties or that are expected to yield
good cash flows when redeveloped or put to
other uses than the current revenue flows at the Cap Ratesfor in 2021 Q1
existing use.
Properties Typically Less than $2.5 M
The cap rates for properties typically below $2.5 Office: Class A 6.5
million tend to be higher than cap rates of
properties that are typically valued at $2.5 million Office: Class B/C 7.2
or over. NAR commercial members reported the Industrial: Warehouse 6.8
lowest cap rate for Class A apartment properties,
at 5.7%, on average. Office acquisitions had a cap Industrial: Flex 6.8
rate of 6.5% on average. Hotel and retail mail Retail: Strip center 7.1
acquisitions had the highest cap rates, at over 8%,
on average. Retail: Mall 8.1
Retail: Free-standing 6.8
Risk Spreads for Properties $2.5 Million or
Apartment: Class A 5.7
Over (Cap Rates Less 10-Year T-Bond) Apartment: Class B/C 6.4
10.0% Hotel/Hospitality 8.2
8.0% Senior housing 7.5
7.3%
Land 6.0
6.0%
5.3% Source: 2021 Q1 NAR CRE Market Survey
4.5%
4.0% For $2.5 million or less properties
3.6%
2.0%
0.0%
05Q3
08Q3
02Q3
16Q1
19Q1
20Q3
13Q1
14Q3
17Q3
01Q1
04Q1
07Q1
11Q3
10Q1
Apartment Industrial
Retail Office
Hotel
Source: Real Capital Analytics
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 63 | LEASING
Leasing Activity for New Leases and
Renewals Continues to Fall in 2021 Q1 YoY % Change in Commercial Leasing
Dollar e Among NAR Commercial
For the fifth consecutive quarter, the dollar Members
volume of new leases and renewals among 12.0%
properties leased or managed by NAR 10.0%
commercial members who responded to the 8.0%
survey fell by 2% on average in 2021 Q2. 6.0%
4.0%
Office Occupancy Continues to Fall While 2.0%
Industrial Occupancy Rises in 2021 Q1 0.0%
-2.0%
For the fourth consecutive quarter, office -4.0% -2%
absorption was negative (-41.1 MSF), bringing -6.0%
the total negative net absorption since 2020
2018.Q1
2021.Q1
2018.Q2
2018.Q3
2018.Q4
2019.Q1
2020.Q1
2019.Q2
2019.Q3
2020.Q2
2020.Q3
2019.Q4
2020.Q4
Q2 to 138.4 million square feet (MSF),
according to Cushman and Wakefield market
data. Office vacancy continued to rise to 16.4%
from 13% in 2020 Q1.
On the other hand, occupancy in industrial Net Absorption (Million Square Feet)
spaces rose 82.7 million square feet in 2021 Q1 and Office Vacancy Rate
and totaled 309.7 million square feet during in 50.0 20.0%
the past four quarters. The increase in 40.0 18.0%
16.4%
industrial absorption offsets the negative net 30.0 16.0%
absorption in the office sector (-138.4 million 20.0 14.0%
square feet (MSF). 10.0 12.0%
0.0 10.0%
-10.0 8.0%
-20.0 6.0%
Absorption of Industrial Space -30.0 4.0%
and Vacancy Rate -40.0 2.0%
-50.0 0.0%
120 12.0%
1998 Q3
2003 Q4
1995 Q1
2005 Q3
2012 Q3
1996 Q4
2002 Q1
2014 Q2
2000 Q2
2007 Q2
2009 Q1
2010 Q4
2016 Q1
2017 Q4
2019 Q3
Millions
100
10.0%
80
60
8.0%
40 Sources: Cushman and Wakefield
20 6.0%
0
4.0%
2013 Q1
1995 Q1
1997 Q2
2001 Q4
1999 Q3
2004 Q1
2008 Q3
2010 Q4
2015 Q2
2017 Q3
2006 Q2
2019 Q4
-20
-40
2.0%
-60
-80 0.0%
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 73 | LEASING
Office Occupancy Continues to Fall in 2021 Q1
Major and/or gateway cities experienced vacancy rates above the national rate
(16.4%) such as Fairfield County (Connecticut), New York, Chicago, Washington
DC, Dallas, Houston, Los Angeles, San Francisco, and Seattle.
On the other hand, smaller or tertiary cities such as Fort Myers, Cleveland, El
Paso, Richmond, Boise, Colorado Springs, Tucson, Puget Sound, Savannah, and
Sacramento had office vacancy rates of less than 10 percent.
Vacancy Rates as of 2021 Q1 Vacancy Rates as of 2021 Q1
Fairfield County 30.9%
Houston 25.1% Fort Myers/Naples 5.9%
New York - Brooklyn 22.7% Roanoke 6.2%
Columbus 22.2% Binghamton 6.5%
Atlanta 22.1% Cleveland
Dallas 22.0% 6.7%
Los Angeles CBD 21.6% El Paso 7.7%
Minneapolis/St. Paul 21.5% Richmond 7.8%
Phoenix 21.0% Boise 8.0%
Chicago 20.5% Hampton Roads 8.5%
Northern New Jersey 20.0% Colorado Springs 8.6%
Milwaukee 20.0% Southern NH 9.0%
Suburban MD 20.0% Inland Empire
Cincinnati 19.9% 9.0%
Hartford 19.6% Fredericksburg 9.1%
Columbia 19.4% Tucson 9.3%
Central New Jersey 19.1% Puget Sound - Eastside 9.9%
San Francisco 18.7% Savannah 9.9%
Northern VA 18.7% Greenville 10.3%
Denver 18.7% New Orleans 10.4%
Indianapolis 18.6% Greensboro/Winston-…
Los Angeles Non-CBD 18.5% 10.9%
Austin 18.2% Charleston 10.9%
Jacksonville 18.1% Tulsa 11.3%
Nashville 18.1% Providence 12.1%
Washington 17.8% San Mateo County 12.2%
Seattle 17.2% Long Island 12.2%
Miami 17.1% Reno 12.4%
New York - Midtown… 17.0%
Birmingham 16.9% Sacramento 12.6%
New York - Midtown 16.8% San Francisco North Bay 12.8%
Salt Lake City 16.6% Orlando 13.0%
Buffalo 16.4% Syracuse 13.0%
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 83 | LEASING
Office Asking Rents Up 5% But Landlords are Providing Concessions
While office occupancy has fallen, asking rents were up 5% year-over-year. Asking rents have not
declined but most landlords have been providing tenant concessions. Fifty-five percent of NAR
commercial members who responded to the latest quarterly commercial survey reported that they
are seeing more tenant concessions compared to the pre-pandemic period.
In the areas with high vacancy rates, asking rents have are still depressed, such as in San Francisco
(-12%) and New York Midtown South (-9%). But in cities with low office vacancy rates, asking rents
have sharply increased, such as In Fort Myers/Naples, Roanoke, Colorado Springs, El Paso,
Sacramento, with asking rents at over 10%.
Year-over-year Percent Change in
Year-over-year Percent Change in Office
Office Rent
Asking Rent
-12.0% San Francisco
Fort Myers/Naples 23.4%
-8.8% New York - Midtown South Roanoke 20.4%
-4.6% Portland Colorado Springs 17.4%
-3.9% Boston San Jose 15.0%
El Paso 12.9%
-3.6% Fort Worth Sacramento 11.8%
-2.8% New York - Downtown Nashville 9.4%
-2.8% New Haven Austin 8.4%
Greenville 6.8%
-2.3% Seattle
Hampton Roads 6.8%
-1.7% Binghamton Omaha 6.5%
-1.7% Orange County Oakland/East Bay 6.0%
-0.9% Northern VA Milwaukee 5.8%
Los Angeles Non-CBD 5.7%
-0.9% Dallas Fort Lauderdale 5.5%
-0.9% Jacksonville Southern NH 5.3%
-0.8% St. Petersburg/Clearwater Savannah 5.1%
Syracuse 5.1%
-0.7% Hartford
Chicago 5.0%
-0.6% Houston Minneapolis/St. Paul 4.9%
-0.6% Tulsa Tucson 4.8%
New York - Midtown Charleston 4.8%
-0.4%
Raleigh/Durham 4.4%
-0.3% Long Island Atlanta 4.2%
-0.2% Baltimore Charlotte 4.2%
-0.1% Washington San Francisco North… 4.2%
Puget Sound -… 4.0%
-0.1% Salt Lake City
Sources: Cushman and Wakefield
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 93 | LEASING
Industrial Occupancy Continues to Increase in 2021 Q1
During 2021 Q2 through 2021 Q1, Atlanta saw the largest increase in net absorption of industrial
space, followed by the Inland Empire, Pennsylvania I-87/79 corridor, Chicago, and Dallas.
Industrial vacancy rate declined to 4.9 percent. The areas with the lowest vacancy rates include
Providence, Orange County, Los Angeles, Philadelphia, and the New Jersey-Central area,
Nashville, Boise, Reno, Tulsa, and Hampton Roads Virginia.
Industrial Vacancy Rate in 2021 Q1 Industrial Net Absorption 2020 Q2-
2021 Q1 in Million Square Feet
Providence, RI 0.1%
Orange County, CA 1.9% Atlanta, GA 29.0
Inland Empire CA 24.9
Los Angeles, CA 2.0% Pennsylvania I-81/I-78 23.0
Philadelphia, PA 2.2% Chicago, IL 19.5
Dallas/Ft. Worth, TX 18.8
New Jersey - Central 2.3% Phoenix, AZ 18.2
Nashville, TN 2.3% Houston, TX 16.4
Memphis, TN 10.5
Boise, ID 2.5% Indianapolis, IN 10.3
Reno, NV 2.8% New Jersey - Central 10.0
Tulsa, OK
Kansas City, MO 9.3
2.8% Columbus, OH 8.7
Hampton Roads, VA 2.8% Louisville, KY 7.6
Richmond, VA Savannah, GA 7.5
3.0% Milwaukee, WI 7.3
Inland Empire CA 3.0% Philadelphia, PA 6.1
Greensboro/Winston-… 3.1%
St. Louis, MO 5.2
Salt Lake City, UT 5.2
Omaha, NE 3.2% Baltimore, MD 4.8
Fort Myers/Naples FL 3.2% Cincinnati, OH 4.7
Orlando, FL 4.3
Portland, OR 3.3% Reno, NV 4.2
Savannah, GA 3.5% Los Angeles, CA 4.1
Las Vegas, NV 4.0
New Jersey - Northern 3.5% Boise, ID 3.8
Milwaukee, WI 3.6% Nashville, TN 3.7
San Antonio, TX 3.4
Long Island, NY 3.8% Denver, CO 3.4
Cleveland, OH 3.8% Jacksonville, FL 3.0
Minneapolis, MN 2.9
Lakeland, FL 2.6
Austin, TX 2.5
Charlotte, NC 2.1
Miami, FL 2.0
Sources: Cushman and Wakefield
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 103 | LEASING
Trend Towards Smaller Square Footage, Companies leasing or moving into
Shorter Term Leases, and More Suburban offices with smaller square
Leases footage due to working from home
70%
69%
During the COVID-19 pandemic, working
from home became the norm. A majority of
NAR commercial members who responded
to the 2021 Q1 commercial survey―70% ―
reported that companies are leasing or 62%
moving into office with small square
footage due to working from home.
More than half of respondents― 57% ―
reported that they are seeing more short- 2020.Q3 2020.Q4 2021.Q1
term leases of less than 2 years compared
to the case prior to the pandemic.
More than half of respondents ― 55% ― Percent of REALTOR®respondents who
reported that more tenants are offering reported "More" short-term office leases
rent concessions, compared to the case of 2 years or less
prior to the pandemic. 63%
While less than a majority of respondents
reported ― 47% ― reported having more
sales or leasing transactions in the 59%
suburban areas compared to the case prior
57%
to the pandemic, the rising share of
respondents indicates an increasing
preference of investors for properties in the
suburbs than in the central business
districts.
2020.Q3 2020.Q4 2021.Q1
Percent of respondents who reported
"More" sales or leasing transactions in
suburban area vs. central business Percent of respondents who reported
district compared to January 2020 "More" landlords offering tenant rent
concessions compared to January
47% 2020
46%
65% 65%
55%
43%
2020.Q3 2020.Q4 2021.Q1
2020.Q3 2020.Q4 2021.Q1
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 114 | CONSTRUCTION
More Residential and Industrial Development
YoY % Change in Construction Projects
Commercial members of NAR who are (in sq.ft) in 2021 Q1
engaged in construction/development
Industrial: Warehouse
reported that on average, their construction
Retail: Free-standing
Apartment Class B/C
activity (in square feet) was up 1% from one
Retail: Strip Center
Apartment Class A
Hotel/hospitality
year ago. On average, respondents reported a
Office Class B/C
Senior housing
Industrial: Flex
Office Class A
12% year-over-year increase in construction
Retail: Mall
activity (in square footage) for industrial
warehouses. Construction activity was also up
by 6% for Class A apartments ad 2% higher for
Class B/C. However, construction activity for 12%
retail malls, office, hotel, retail, and senior 6% 6%
housing declined. 2% 1% 0%
Respondents of the 2021 Q1 survey reported 0%
-3%
that obtaining construction materials and -5%
-9%
getting permits were the main factors causing -11%
construction delays, with half of respondents
citing these causes. Hiring workers was cited
by a third of respondents. Obtaining was cited
by only less than 1 in 5 respondents, which
indicates that obtaining financing is not a
major issue for developers. Percent of NAR Commercial Member
Respondents Who Reported These
Delays were typically up to 3 months. No Causes of Delay in 2021 Q1 Survey
respondents to the 2021 Q1 survey reported a
delay of more than 6 months. Obtaining construction
50%
materials
Construction Delays Reported by NAR
Getting permits 50%
Commercial Members Engaged in
Development in 2021 Q1 Survey
Hiring workers 32%
More than 6 months 0%
Obtaining lender financing 18%
Up to 6 months 25% Other 18%
Up to 3 months 54%
No delay 21%
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 124 | CONSTRUCTION
Repurposing Vacant Malls
Vacant malls are being converted into other uses. In the 2021 Q1 survey, 39% of the reported
responses were conversion of the vacant mall into a mixed –use project. The next most prevalent
reuse was as a distribution center, a church, or a self-storage facility.
In 2020, NAR compiled a list of case studies on the conversion of vacant malls to other uses to
provide a blueprint on how to finance the conversion and how state and local governments can
support the conversion of vacant malls to other uses. Download the report here.
How are vacant malls being repurposed in your market?
2021 Q1 Survey
Mixed-use (residential , retail, office) 39%
Industrial use: Distribution/fulfillment center 25%
Church 21%
Self-storage 20%
Health care/hospital/medical 19%
Office space 17%
Multifamily/residential 12%
Government building (office, police precinct) 9%
College/university office 8%
Health armory 4%
Sports stadium 2%
Other 25%
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 135 | COMMERCIAL OUTLOOK
NAR Commercial Members Expect More Expected Change in Dollar Sales
Sales Transactions in Land, Residential, and Volume in the Next 12 Months Among
Industrial Properties NAR Commercial Members
5% Land
Commercial members of NAR who 3% Industrial: Warehouse
responded to the survey anticipate a modest 2% Industrial: Flex
increase in sales of land (5%), industrial 1% Apartment Class B/C
warehouses (3%), and Class B/C apartments 0% Senior housing
-1% Apartment Class A
(1%) in the next 12 months. Respondents -1% Office Class A
anticipate a decline in sales transactions for -1% Retail: Free-standing
retail, office, and hotel/hospitality properties. -1% Office Class B/C
-1% Retail: Strip Center
Pertaining to land sales, respondents -2% Hotel/Hospitality
-3% Retail: Mall
anticipate strong sales growth for residential
land (8%), industrial land (7%), and
recreational land (5%), as well as agricultural
land (5%). Expected Change in Dollar Land Sales in
the Next 12 Months Among NAR
Respondents expect commercial prices to Commercial Members
increase in the next 12 months across most
property types, except for office, retail, and Residential 8%
hotel properties. Industrial 7%
Recreational 5%
Agri, cultivable, irrig. 5%
Ranch 4%
For office/retail/hotel 3%
Development-Greenfield 3%
Timber 3%
Agri, cultivable, non-irrig. 2%
Development-Brownfield 1%
Expected Change in Land Prices in the Other 5%
Next 12 Months Among NAR
Commercial Members
Residential 10%
Industrial 7%
Recreational 6% Expected Change in Commercial Prices
Ranch 6% in the Next 12 Months Among NAR
Agri, cultivable, irrig. 5% Commercial Members
Timber 4% 6% Land
Agri, cultivable, non-irrig. 3% 5% Industrial: Warehouse
Development-Greenfield 3% 5% Industrial: Flex
For office/retail/hotel 3% 5% Apartment Class B/C
Development-Brownfield 4% Apartment Class A
2%
3% Senior housing
0% Retail: Free-standing
-1% Office Class B/C
-1% Retail: Strip Center
-2% Office Class A
-2% Hotel/Hospitality
-5% Retail: Mall
NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 14COMMERCIAL REAL ESTATE TRENDS & OUTLOOK April 2021 NAR RESEARCH GROUP Lead Team Research and Analysis LAWRENCE YUN, PhD Chief Economist & Senior Vice President for Research GAY CORORATON Senior Economist & Director of Housing and Commercial Research BRANDON HARDIN Research Economist MEREDITH DUNN Manager, Research ANNA SCHNERRE Research Associate, Business Insights This report is based on information collected from NAR’s 2021 Q1 Commercial Real Estate Quarterly Market Survey. The survey asks about the commercial transactions of REALTORS® and members of NAR’ commercial affiliate organizations (CCIM, SIOR, RLI, IREM, and the Counselors of Real Estate) during the fourth quarter of 2020. The survey was sent to approximately 76,000 commercial REALTORS® and members of affiliate organizations during April 1–22, 2021, of which 1,043 provided answers to at least one question. There were 346 respondents who reported a sales transaction, 153 respondents who reported a land sales transaction, 35 respondents who reported a leasing transaction, and 19 respondents who provided information on development transactions. Given the small sample size, the figures cited in this report should be treated with caution and should be interpreted as indicators of market trends rather than as accurate market statistics. The NAR Research Group acknowledges the I/S/Cs for reaching out to their members to respond to the survey and developing the survey: Aubrie Kobernus, CEO, Realtors® Land Institute; Denise LeDuc-Froemming, CEO/EVP, IREM; Alexis Fermanis, Communications Director, SIOR; and Greg Fine, CEO/EVP, CCIM Institute. The Research Group also acknowledges Charlie Dawson, Vice-President, Engagement, and Rodney Gansho, Director of Engagement, in reaching out to CCIM, CRE, IREM, SIOR, and RLI designees to respond to the survey. ©2021 National Association of REALTORS® All Rights Reserved. May not be reprinted in whole or in part without permission of the National Association of REALTORS®. For question about this report or reprint information, contact data@realtors.org. Download report at: https://www.nar.realtor/commercial-real-estate-market-survey
The National Association of REALTORS® is America’s largest trade association, representing more than 1.4 million members, including NAR’s institutes, societies and councils, involved in all aspects of the real estate industry. NAR membership includes brokers, salespeople, property managers, appraisers, counselors and others engaged in both residential and commercial real estate. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics. Working for America's property owners, the National Association provides a facility for professional development, research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system and the right to own real property. NATIONAL ASSOCIATION OF REALTORS® RESEARCH GROUP The Mission of the NATIONAL ASSOCIATION OF REALTORS® Research Group is to produce timely, data-driven market analysis and authoritative business intelligence to serve members, and inform consumers, policymakers and the media in a professional and accessible manner. To find out about other products from NAR’s Research Group, visit www.nar.realtor/research-and-statistics 500 New Jersey Avenue, NW Washington, DC 20001 202.383.1000
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