commercial real estate market survey may 2013

7/28/2019 Commercial Real Estate Market Survey May 2013

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MAY 2013

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Copyright © 2013 NATIONAL ASSOCIATION OF REALTORS®. Reproduction, reprinting or retransmission

in any form is prohibited without written permission. For questions regarding this matter please e-mail

[email protected].

THE NATIONAL ASSOCIATION OF REALTORS®, “The Voice for Real Estate,” is America’s largest tradeassociation, representing 1.0 million members involved in all aspects of the residential and commercial real

estate industries..

Although the information presented in this survey has been obtained from reliable sources, NAR does notguarantee its accuracy, and such information may be incomplete. This report is for information purposes

only.

The REALTORS® Commercial Real Estate Market Survey measures quarterly activity in the commercial

real estate markets. The survey collects data* from commercial REALTORS®. The survey is designed

to provide an overview of market performance, sales and rental transactions, along with current

economic challenges and future expectations.

2NATIONAL ASSOCIATION of REALTORS® | RESEARCH DIVISION | www.realtors.org/research

NOTE: In January 2013, NAR invited a random sample of 41,974 REALTORS® with an interest in

commercial real estate to fill an on-line survey. A total of 285 responses were received, for an overall

response rate of 0.7 percent.



2013.Q1 Survey Highlights

• REALTOR® commercial markets recorded improved conditions for both sales and leasing

• Sixty-four percent of commercial REALTORS® closed a sales transaction during the

quarter.

• Sales volume rose 3.0 percent from a year ago. • Sales prices inched up 0.3 percent on a year -over-year basis.

• Leasing activity advanced 5.0 percent from the previous quarter. • Rental rates increased 1.0 percent compared with the previous quarter.

• Concession levels declined 5.0 percent on a quarterly basis. • Financing remains at the top of the current challenges list, followed by pricing gap betweebuyers and sellers.

• The estimated average transaction slid from $1.2 million to $1.1 million from the prior quarter.

3

REALTORS ® Commercial Activity – 2013.Q1

Sales Volume Compared with Previous Quarter Up 3%

Sales Volume Compared with Previous Year Up 5%

Sales Prices Compared with Previous Quarter Down 1%

Sales Prices Compared with Previous Year Up 0.3%

Expected Inventory Availability for the Next 12 Months Down 1%

Rental Volume Compared with Previous Quarter Up 5%

Rental Rates Compared with Previous Quarter Up 1%

Level of Rent Concessions Compared with Previous Quarter Down 5%

Volume of New Construction Compared with Previous Quarter Up 0.5%

Direction of Business Opportunities Compared with Previous Quarter Up 4%

NATIONAL ASSOCIATION of REALTORS® | RESEARCH DIVISION | www.realtors.org/research

MAY 2013



4

2013.Q1 Cap Rates

Office 8.7%

Industrial 8.7%

Retail 8.6%

Multifamily 8.7%

Hotel 9.2%

Development 11.3%

2013.Q1 Vacancy Rates

Office 17.6%

Industrial 12.6%

Retail 16.0%

Multifamily 7.9%

Hotel 19.9%


MAY 2013

64%

36%

Did you complete a sales

transaction?

Yes

No

1%

1%

10%

14%

19%

20%

35%

Over $10 M

Between $5 M and $10 M

$2 M and $5 M

Between $1 M and $2 M

Between $500K and $1 M

Between $250K and $500K

Under $250K

Dollar amount of last transaction

0% 20% 40% 60% 80% 100%

13.Q1

12.Q4

REALTORS ® Most Pressing Challenges

Inventory

DistressFinancing

Local Economy

National Economy

Pricing Gap: Buyers vs Selle

Other




MAY 2013

%

%

%

%

%

%

%

%

%

0 - 12 months 12 months 24 months 36 months 48 months 60 + months 60 months

Average lease term during last transaction

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

3.Q1

2.Q4

Average Rental Space Demanded During Last Transaction

Over 100,000 sq ft

50,000 - 100,000 sq

10,000 - 49,999 sq f

7,500 - 9,999 sq ft

5,000 - 7,499 sq ft

2,500 - 4,999 sq ft

Under 2,500 sq ft




MAY 2013

State-level data may register large fluctuations from one period to the next due to small sample sizes in some states.




MAY 2013




The REALTORS® Commercial Real Estate Quarterly Market Survey asks participants to comment on

current conditions in their markets. Below are a few of the comments about the latest quarter environmen

Activity is increasing along the Gulf of Mexico coast south of our county.

A lot of activity and actual closings but no upward pressure on prices.

Apartment vacancy very low but new construction is at a historic high. 4 times the average of past 10 years. For the Last 3

most office space is rented and sold to high tech national firms: Google, Microsoft, Disney, education, local governments, b

tech. City, County, School and non profits have dominated the market.

As the population continues to grow, small business growth follows. The influx of foreign dollars create a shortage of

properties as they buy to hold and Cities have created so much red tape that new developments take years instead of

months.

Banks need to start lending

Biggest problem is banks are not making commercial real estate loans.

Buffalo metropolitan market remains steady but not a tremendous growth indication. We have always experienced slow

and steady growth.

Buyers with strong balance sheets are where I direct most of my focus.

Columbus, Ohio market has been strong for the last 18 months.

Elizabethtown, Kentucky is a stable market due to Fort Knox and good industry. New single family residential development

slow but apartment development has been good.

Financing and low inventory are still main problems along with a lack of new tenants and tenants downsizing.

Financing continues to be a major problem, and the values between what a seller thinks it's worth and what a buyer is

willing to pay, big problem.

Financing for spec industrial development is needed - supply is very low and no new construction.

Financing is still a huge issue. Local banks are able but not thrilled to lend without pretty onerous requirements. Larger loa

seem to be easier to obtain than smaller loans. One very significant issue: uncertainty created by lawmakers at all levels of

government.

Financing is still difficult and prospective owners/investors are afraid to take risks.

Financing remains our strongest issue. Multi-family in our area is flat even though it is up across the country. Warehousing

has not yet come back.


MAY 2013



The REALTORS® Commercial Real Estate Quarterly Market Survey Comments—continued.

12

Glad to be in Houston, Texas.

Hot in multi units, cold on office sector, industrial is improving to hot level, retail is just hang on there.

I am in a ski resort market which has unique dynamics.

I believe it will all come back in the next election.

I deal mainly in land transactions. We have some properties in very hot markets now.

I primarily list and sell vacant land and large acreage equestrian properties. The lack of financing makes it more difficult to

sell the vacant land. If Dodd-Frank goes into effect as written it will have a very negative effect on the sale of vacant land.

The requirement that seller financing be fully amortized will make it more difficult as will the seller having liability if they

don't qualify the buyer regarding their ability to pay.

If not for financing, this would be a "normal" market again.

In our area code the level of activity and deals is definitely up.

It does not appear that until lenders relax their lending practices that there will be much in the way of purchases in 2013.

It is the best market in the US right now because of all the jobs being added statewide.

It still seems to be a "wait-and-see" market. There is more activity and pressure to move forward, but there are too many

unsettled questions.

It's terrible. Please give us a free market price system and stop government spending.

Lack of direction in government and threat of additional taxation.

Lack of inventory and obtaining a loan are the two biggest challenges in the commercial market.

Lenders do not want to lend. Even with 50% down, the SBA loan on my industrial listing took 7 months to close.

Low inventory.

Market getting better.

Market is getting better slowly and carefully.

Market is looking very hopeful. Although the available inventory is dropping.


MAY 2013




13

Market is slowly improving.

Market is stable, even fairly strong. However, among almost all groups there is a fear of world financial instability and a

desire to protect your resources. This is not a fiction.

Market is very active in all phases of commercial

Markets seem to be "looking and feeling better" but upon review my 1st quarter 2013 sales were the same as my 1st

quarter 2012 sales.

Minot, ND has been fortunate and we have not seen any downturn in our market over the past few years.

Our market is booming. Our residential market is booming. Last month - our office alone sold $41,000,000 of real estate.

Commercial market follows behind. We are seeing a lot of increased activity in all means and manner of property - land,

commercial - retail - office - industrial, etc. - sales, leasing, new construction.

Our market is driven by oilfield and medical, both are doing well but would do better is President and Congress would allow

less regulations.

Our market is in recession.

Our market seems to be more active in high end office leases and quality industrial.

Owners are struggling w difficulty rolling over commercial notes

Regarding #22 above, there is a trend toward storefront churches in former retail spaces.

Residential market is red hot but commercial is slow primarily due to lack of financing.

Severe poor economy one of the former largest paper mill is about to be reduced to a pulp mill laying off some 400 to 600

workers out of the 800 left. This is a ten Town Community of less than 10,000 all together!

Sitting on the edge of uncertainty. The stock market is up, but real estate investments require long terms decisions, and

there are still far too many highly variable factors for the appetite of most commercial investors.

Slow rebound.

Slowly getting better.

Small town, small deals.

Specialize in downtown Las Vegas and this market is unique from the rest of the valley.


MAY 2013




14

Steady improvement - slow but getting better.

The activity is increasing although the concession demand is even greater.

The government is still a drag on the economy , federal, state, and municipal- too much regulation and too slow to get

things approved,

The lack of lending, the requirements for a high down payment is our major problem. The other problem is the perception

property owners that their property values are still too low and only "bottom feeders" are out buying commercial property

The market activity has picked up substantially, business has decided what the climate is and has decided to move on with

the present situation and keep pushing forward to create business opportunities.

The market has bottomed out.

The market is saturated with spec office space, some owned by lenders and owners who will give away more than my

clients.

The market will quickly change to a seller and landlord market once buyers and tenants begin to realize that inventory in

decreasing in certain segments, and low interest rates start to climb.

There are too many properties for lease and no customers and lenders for them.

There are very few users.

Very "iffy" come back.

Very slow but steady recovery since the first of the year, last 2 qts of 2012 were so sorry, we should have gone to the beac

We had a burst of activity 6 to 12 months ago but it has slowed down again.

Weak economy equals slow to no growth.

Wanting to get out of commercial sales and rentals.


MAY 2013



NATIONAL ASSOCIATION OF REALTORS ® RESEARCH DIVISION

The Research Division of the NATIONAL ASSOCIATION

of REALTORS® produces the Commercial Real Estate

Outlook, a quarterly report forecasting commercial marke

fundamentals. The Research Division also issues the

annual Commercial Member Profile, detailing the busines

and demographic characteristics of commercial members

Additionally, NAR Research examines how changes in th

economy affect the commercial real estate business, and

evaluates regulatory and legislative policy proposals for

their impact on REALTORS®, their clients and America’sproperty owners.

If you have questions or comments regarding this report

any other commercial real estate research, contactGeorge Ratiu, Manager, Quantitative & Commercial

Research, at [email protected].

To find out about other CRE research products:

15

500 New Jersey Avenue, NW • Washington, DC 20001 – 2020

800.874.6500 • www.REALTOR.org

MAY 2013

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