Commercial Real Estate Market Posts Gains Across the Board

The commercial real estate market continues to rebound, showing steady gains in pricing and transaction activity in all major property types throughout the country, according to the latest CoStar Commercial Repeat Sales Indices report.
First-quarter sales volume rose 33 percent over year-ago levels, according to the report. Vacancies have dropped to within 100 basis points of pre-recession levels in the office and retail sectors, and they are lower than pre-recession levels for industrial properties.
What’s more, the percentage of deals selling at distressed pricing has also continued to fall, down by more than two-thirds from its peak levels in 2011, according to the report.
Pricing gains were posted in all major property types, with the retail and industrial sectors posting the strongest growth in the past year. Pricing has already overtaken previous peak levels in some primary markets, such as New York and San Francisco.
“While demand growth has so far been modest compared with the previous cycle, the slower pace of absorption has kept new development in check,” according to CoStar’s report. “That has allowed vacancy rates to continue to shrink in all but the apartment sector, where new supply has now exceeded absorption gains.”
The West is posting some of the largest gains among the four major U.S. regions. Multifamily property has risen to within 4 percent of its previous peak in the West. The office, retail, and industrial markets have all posted double-digit gains, and industrial properties in the West, particularly driven by demand by warehouses, has posted some of the largest gains in that sector in the country.
By: National Association of REALTORS® (REALTORMag)
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