commercial real estate trends & outlook april 2021

Commercial Real EstateTrends & OutlookApril 2021National Association of REALTORS® Research Group

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!

COMMERCIAL REAL ESTATE TRENDS & OUTLOOKApril 2021 Report

Commercial Sales Transactions Down 28% from One Year Ago

As businesses continue to operate below normal capacity and with people and businesses still holding back on travel and recreation with COVID-19 vaccinations still underway, commercial sales transactions continued to decline in the first quarter of 2021.

Commercial transactions of $2.5 million and above decreased 28% from one year ago, according to Real Capital Analytics. Transactions were down across all property types except for hotel properties where acquisitions rose 13%. Investors could be acquiring some hotels to be converted into other uses, such as multifamily housing. Apartment buildings accounted for a third of the closed transactions.

In the small CRE market where transactions are less than $2.5 million, NAR commercial members who participated in the 2021 Q1 Commercial Real Estate Quarterly Survey reported that their sales transactions volume in the first quarter of 2020 contracted on average by 1% compared to the level one year ago. Respondents reported an increase in acquisitions for industrial properties and all types of land, with strong growth in sales of residential and industrial land.

3NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics

1 | COMMERCIAL SALES

-1%

-28%

-80%

-60%

-40%

-20%

0%

20%

40%

2018

.Q1

2018

.Q2

2018

.Q3

2018

.Q4

2019

.Q1

2019

.Q2

2019

.Q3

2019

.Q4

2020

.Q1

2020

.Q2

2020

.Q3

2020

.Q4

Quarterly Sales Volume (YoY % Change) as of 2021 Q1

REALTOR® CRE Markets $2.5+M Market

-4%-3% -3% -3%

-2% -2% -1%-1%

0%1% 2%

3%

YoY % Change in the Dollar Commercial Sales Volume in 2021 Q1 Among NAR

Commercial Members

$2.5 Million or More Transactions

Vol ($b) YOYOffice 20.5 -36%Retail 7.8 -42%Industrial 19.6 -41%Hotel 5.6 13%Apartment 35.5 -12%Seniors Housing & Care 3.3 -8%Dev Site 4.3 -40%Total 96.7 -28%

Q1 '21

1%1% 2% 2%

3%4% 4%

5% 6%

7%

YoY % Chg of Land Sales Among NAR Commercial Members in 2021 Q1

Real Capital Analytics


1 | COMMERCIAL SALES

For deals of $2.5 million or more, Boston, Dallas, Los Angeles, Atlanta, and Phoenix closed the most deal volume in the first quarter of 2021. Except for Boston, the top five markets are all non-gateway cities.

In Boston, the bulk of the deals were for office properties. In Dallas, Los Angeles, Atlanta, and Phoenix, a large component was for apartment properties.

Distressed Sales at 2% of Total Transactions

Among transactions of $2.5 million or over, distressed sales accounted for less than 2% of sales. Despite the rise in vacancy rates, there are little distressed sales compared to the Great Recession when distressed sales made up nearly 20% of sales. One reason is that investors like REITS are less leveraged this time compared to the Great Recession. During the Great Recession, the debt to total market capitalization (debt plus equity) of equity REITS market hit a peak of 57.5%.1 As of March 2021, the debt to equity ratio is at 32.3%, according to Nareit.2

$6.6$5.8

$4.7$4.3$4.3

$2.8$2.6

$2.2$2.2$2.2

$2.0$1.9

$1.8$1.6$1.6$1.5$1.5$1.5$1.5$1.4

$1.3$1.2$1.2$1.1$1.1$1.1$1.1$1.0$1.0

BostonDallas

Los AngelesAtlanta

PhoenixSeattle

HoustonNo NJ

ChicagoAustin

San FranciscoDenver

Miami/Dade CoEast Bay

ManhattanSan Jose

BaltimoreInland Empire

Orange CoSan DiegoCharlotte

OrlandoDC VA burbs

TampaPalm Beach Co

PortlandRichmond/Norfolk

NYC BoroughsSalt Lake City

Commercial Transactions of $2.5M or Over Closed in 2021 Q1 in Billion Dollars

1.8%0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

07Q

10

8Q1

09Q

110

Q1

11Q

112

Q1

13Q

114

Q1

15Q

116

Q1

17Q

118

Q1

19Q

120

Q1

21Q

1

Distressed Sales as a Percent of Total Sales of Properties $2.5 Million or Over



1 Nareit, https://www.reit.com/news/blog/nareit-media/equity-reits-have-lowest-debt-ratio-20-years2 Nareit, https://www.reit.com/sites/default/files/2021-04/MediaFactSheet_Mar-2021.pdf

https://www.reit.com/news/blog/nareit-media/equity-reits-have-lowest-debt-ratio-20-years

Commercial Prices are Recovering But Still Down 6%

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, based on the Green Street Commercial Price Index, an appraisal-based index of the properties held by REITs. The decline has tapered off from the 10% decline in the second quarter of 2020.

Among closed transactions valued at $2.5 million or over, sales prices rose 6.7% from one year ago, according to Real Capital Analytics.

Among closed transactions of NAR commercial members which are typically 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 (+5%). Sales prices of residential land were up 9% on average, according to NAR commercial members.


2 | COMMERCIAL PRICES

2.0%

6.7%

-5.6%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

2018

.Q1

2018

.Q2

2018

.Q3

2018

.Q4

2019

.Q1

2019

.Q2

2019

.Q3

2019

.Q4

2020

.Q1

2020

.Q2

2020

.Q3

2020

.Q4

2021

.Q1

Y/Y % Change in Commercial Property Prices

REALTOR® CRE Markets % Chg Y/Y$2.5M+ MarketGreen Street

-4%

-2% -1% -1%-1%

2% 2%

3%5% 5% 5%

6%

YoY % Change of Sales Prices of Commercial Acquisitions Typically

Below $2.5 Million in 2021 Q1

2%

3%4% 4% 4% 4%

5%6%

6%

9%

YoY % Change in Land Sales Prices in 2021 Q1 For Properties Typically Below

$2.5 Million

Cap Rates on the Decline

As commercial prices continue to firm up, cap rates continued to decline. Apartment acquisitions had the lowest cap rate of 4.9%, followed by industrial at 5.9%. Hotel properties had the highest cap rates, at 8.6%. Office cap rates were at 6.6% .

Risk spreads (cap rate less 10-year T-note) for office, retail, industrial and hotel have also trended downwards and cap rates are now at about the same level in 2021 Q1 compared to one year ago. However, the market is still thin so these 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 existing use.

The cap rates for properties typically below $2.5 million tend to be higher than cap rates of properties that are typically valued at $2.5 million or over. NAR commercial members reported the lowest cap rate for Class A apartment properties, at 5.7%, on average. Office acquisitions had a cap rate of 6.5% on average. Hotel and retail mail acquisitions had the highest cap rates, at over 8%, on average.


2 | COMMERCIAL PRICES

3.6%4.5%5.3%

7.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

01Q

10

2Q3

04

Q1

05Q

30

7Q1

08Q

310

Q1

11Q

313

Q1

14Q

316

Q1

17Q

319

Q1

20Q

3

Risk Spreads for Properties $2.5 Million or Over (Cap Rates Less 10-Year T-Bond)

Apartment Industrial

Retail Office

Hotel

Cap Ratesfor in 2021 Q1

Office: Class A 6.5Office: Class B/C 7.2Industrial: Warehouse 6.8Industrial: Flex 6.8Retail: Strip center 7.1Retail: Mall 8.1Retail: Free-standing 6.8Apartment: Class A 5.7Apartment: Class B/C 6.4Hotel/Hospitality 8.2Senior housing 7.5Land 6.0Source: 2021 Q1 NAR CRE Market Survey

For $2.5 million or less properties

Properties Typically Less than $2.5 M

Source: Real Capital Analytics

Cap Rates in 2021 Q1 Properties $2.5 M or More

Office 6.6%Industrial 5.9%Retail 6.7%Apartment 4.9%Hotel 8.6%Seniors Housing & Care 7.0%Source: Real Capital Analytics

Leasing Activity for New Leases and Renewals Continues to Fall in 2021 Q1

For the fifth consecutive quarter, the dollar volume of new leases and renewals among properties leased or managed by NAR commercial members who responded to the survey fell by 2% on average in 2021 Q2.

Office Occupancy Continues to Fall While Industrial Occupancy Rises in 2021 Q1

For the fourth consecutive quarter, office absorption was negative (-41.1 MSF), bringing the total negative net absorption since 2020 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 spaces rose 82.7 million square feet in 2021 Q1 and totaled 309.7 million square feet during in the past four quarters. The increase in industrial absorption offsets the negative net absorption in the office sector (-138.4 million square feet (MSF).


3 | LEASING

-2%

-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%

10.0%12.0%

2018

.Q1

2018

.Q2

2018

.Q3

2018

.Q4

2019

.Q1

2019

.Q2

2019

.Q3

2019

.Q4

2020

.Q1

2020

.Q2

2020

.Q3

2020

.Q4

2021

.Q1

YoY % Change in Commercial Leasing Dollar e Among NAR Commercial

Members

16.4%

0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%16.0%18.0%20.0%

-50.0-40.0-30.0-20.0-10.0

0.010.020.030.040.050.0

1995

Q1

1996

Q4

1998

Q3

200

0 Q

220

02

Q1

200

3 Q

420

05

Q3

200

7 Q

220

09

Q1

2010

Q4

2012

Q3

2014

Q2

2016

Q1

2017

Q4

2019

Q3

Net Absorption (Million Square Feet) and Office Vacancy Rate

Sources: Cushman and Wakefield

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

-80-60-40-20

020406080

100120

1995

Q1

1997

Q2

1999

Q3

200

1 Q4

200

4 Q

120

06

Q2

200

8 Q

320

10 Q

420

13 Q

120

15 Q

220

17 Q

320

19 Q

4

Mill

ion

s

Absorption of Industrial Space and Vacancy Rate


3 | LEASING

30.9%25.1%

22.7%22.2%22.1%22.0%21.6%21.5%21.0%20.5%20.0%20.0%20.0%19.9%19.6%19.4%19.1%18.7%18.7%18.7%18.6%18.5%18.2%18.1%18.1%17.8%17.2%17.1%17.0%16.9%16.8%16.6%16.4%

Fairfield CountyHouston

New York - BrooklynColumbus

AtlantaDallas

Los Angeles CBDMinneapolis/St. Paul

PhoenixChicago

Northern New JerseyMilwaukee

Suburban MDCincinnati

HartfordColumbia

Central New JerseySan Francisco

Northern VADenver

IndianapolisLos Angeles Non-CBD

AustinJacksonville

NashvilleWashington

SeattleMiami

New York - Midtown…Birmingham

New York - MidtownSalt Lake City

Buffalo

Vacancy Rates as of 2021 Q1

13.0%13.0%12.8%12.6%12.4%12.2%12.2%12.1%

11.3%10.9%10.9%

10.4%10.3%

9.9%9.9%

9.3%9.1%9.0%9.0%

8.6%8.5%

8.0%7.8%7.7%

6.7%6.5%6.2%5.9%

SyracuseOrlando

San Francisco North BaySacramento

RenoLong Island

San Mateo CountyProvidence

TulsaCharleston

Greensboro/Winston-…New Orleans

GreenvilleSavannah

Puget Sound - EastsideTucson

FredericksburgInland Empire

Southern NHColorado SpringsHampton Roads

BoiseRichmond

El PasoCleveland

BinghamtonRoanoke

Fort Myers/Naples

Vacancy Rates as of 2021 Q1

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.

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%.


3 | LEASING

-12.0%-8.8%

-4.6%-3.9%-3.6%

-2.8%-2.8%-2.3%

-1.7%-1.7%-0.9%-0.9%-0.9%-0.8%-0.7%-0.6%-0.6%-0.4%-0.3%-0.2%-0.1%-0.1%

San FranciscoNew York - Midtown SouthPortlandBostonFort WorthNew York - DowntownNew HavenSeattleBinghamtonOrange CountyNorthern VADallasJacksonvilleSt. Petersburg/ClearwaterHartfordHoustonTulsaNew York - MidtownLong IslandBaltimoreWashingtonSalt Lake City

Year-over-year Percent Change in Office Asking Rent

4.0%4.2%4.2%4.2%4.4%4.8%4.8%4.9%5.0%5.1%5.1%5.3%5.5%5.7%5.8%6.0%6.5%6.8%6.8%8.4%9.4%

11.8%12.9%

15.0%17.4%

20.4%23.4%

Puget Sound -…San Francisco North…

CharlotteAtlanta

Raleigh/DurhamCharleston

TucsonMinneapolis/St. Paul

ChicagoSyracuse

SavannahSouthern NH

Fort LauderdaleLos Angeles Non-CBD

MilwaukeeOakland/East Bay

OmahaHampton Roads

GreenvilleAustin

NashvilleSacramento

El PasoSan Jose

Colorado SpringsRoanoke

Fort Myers/Naples

Year-over-year Percent Change in Office Rent


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.


3 | LEASING


29.024.9

23.019.518.818.2

16.410.510.310.09.38.7

7.67.57.3

6.15.25.24.84.74.34.24.14.03.83.73.43.43.02.92.62.52.12.0

Atlanta, GAInland Empire CA

Pennsylvania I-81/I-78Chicago, IL

Dallas/Ft. Worth, TXPhoenix, AZHouston, TX

Memphis, TNIndianapolis, IN

New Jersey - CentralKansas City, MO

Columbus, OHLouisville, KY

Savannah, GAMilwaukee, WI

Philadelphia, PASt. Louis, MO

Salt Lake City, UTBaltimore, MDCincinnati, OH

Orlando, FLReno, NV

Los Angeles, CALas Vegas, NV

Boise, IDNashville, TN

San Antonio, TXDenver, CO

Jacksonville, FLMinneapolis, MN

Lakeland, FLAustin, TX

Charlotte, NCMiami, FL

Industrial Net Absorption 2020 Q2-2021 Q1 in Million Square Feet

0.1%1.9%2.0%2.2%2.3%2.3%

2.5%2.8%2.8%2.8%

3.0%3.0%3.1%3.2%3.2%3.3%3.5%3.5%3.6%3.8%3.8%

Providence, RIOrange County, CA

Los Angeles, CAPhiladelphia, PA

New Jersey - CentralNashville, TN

Boise, IDReno, NVTulsa, OK

Hampton Roads, VARichmond, VA

Inland Empire CAGreensboro/Winston-…

Omaha, NEFort Myers/Naples FL

Portland, ORSavannah, GA

New Jersey - NorthernMilwaukee, WI

Long Island, NYCleveland, OH

Industrial Vacancy Rate in 2021 Q1

Trend Towards Smaller Square Footage, Shorter Term Leases, and More Suburban Leases

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 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-term leases of less than 2 years compared to the case prior to the pandemic.

More than half of respondents ― 55% ―reported that more tenants are offering rent concessions, compared to the case prior to the pandemic.

While less than a majority of respondents reported ― 47% ― reported having more sales or leasing transactions in the suburban areas compared to the case prior 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.


3 | LEASING

59%

63%

57%

2020.Q3 2020.Q4 2021.Q1

Percent of REALTOR®respondents who reported "More" short-term office leases

of 2 years or less

62%

69%70%

2020.Q3 2020.Q4 2021.Q1

Companies leasing or moving into offices with smaller square

footage due to working from home

65% 65%55%

2020.Q3 2020.Q4 2021.Q1

Percent of respondents who reported "More" landlords offering tenant rent

concessions compared to January 2020

43%

46%47%

2020.Q3 2020.Q4 2021.Q1

Percent of respondents who reported "More" sales or leasing transactions in

suburban area vs. central business district compared to January 2020

More Residential and Industrial Development

Commercial members of NAR who are engaged in construction/development reported that on average, their construction activity (in square feet) was up 1% from one year ago. On average, respondents reported a 12% year-over-year increase in construction 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 retail malls, office, hotel, retail, and senior housing declined.

Respondents of the 2021 Q1 survey reported that obtaining construction materials and getting permits were the main factors causing 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.

Delays were typically up to 3 months. No respondents to the 2021 Q1 survey reported a delay of more than 6 months.


4 | CONSTRUCTION

12%

6% 6%2% 1%

0%-3% -5%

-9% -11%

0%

Ind

ust

rial

: War

ehou

se

Ap

artm

ent

Cla

ss A

Ind

ust

rial

: Fle

x

Ap

artm

ent

Cla

ss B

/C

Ret

ail:

Free

-sta

nd

ing

Off

ice

Cla

ss A

Ret

ail:

Stri

p C

ente

r

Off

ice

Cla

ss B

/C

Hot

el/h

osp

ital

ity

Ret

ail:

Mal

l

Sen

ior

hou

sin

g

YoY % Change in Construction Projects (in sq.ft) in 2021 Q1

18%

18%

32%

50%

50%

Other

Obtaining lender financing

Hiring workers

Getting permits

Obtaining constructionmaterials

Percent of NAR Commercial Member Respondents Who Reported These Causes of Delay in 2021 Q1 Survey

21%

54%

25%

0%

No delay

Up to 3 months

Up to 6 months

More than 6 months

Construction Delays Reported by NAR Commercial Members Engaged in

Development in 2021 Q1 Survey

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.


4 | CONSTRUCTION

39%25%

21%20%

19%17%

12%9%

8%4%

2%25%

Mixed-use (residential , retail, office)Industrial use: Distribution/fulfillment center

ChurchSelf-storage

Health care/hospital/medicalOffice space

Multifamily/residentialGovernment building (office, police precinct)

College/university officeHealth armory

Sports stadiumOther

How are vacant malls being repurposed in your market? 2021 Q1 Survey

https://www.nar.realtor/sites/default/files/documents/2020-case-studies-on-repurposing-vacant-retail-malls-05-08-2020.pdf


5 | COMMERCIAL OUTLOOK

-3%-2%

-1%-1%-1%-1%-1%0%

1%2%

3%5%

Retail: MallHotel/HospitalityRetail: Strip CenterOffice Class B/CRetail: Free-standingOffice Class AApartment Class ASenior housingApartment Class B/CIndustrial: FlexIndustrial: WarehouseLand

Expected Change in Dollar Sales Volume in the Next 12 Months Among

NAR Commercial Members

NAR Commercial Members Expect More Sales Transactions in Land, Residential, and Industrial Properties

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%) in the next 12 months. Respondents anticipate a decline in sales transactions for retail, office, and hotel/hospitality properties.

Pertaining to land sales, respondents anticipate strong sales growth for residential land (8%), industrial land (7%), and recreational land (5%), as well as agricultural land (5%).

Respondents expect commercial prices to increase in the next 12 months across most property types, except for office, retail, and hotel properties.

5%1%

2%3%3%3%

4%5%5%

7%8%

OtherDevelopment-BrownfieldAgri, cultivable, non-irrig.

TimberDevelopment-Greenfield

For office/retail/hotelRanch

Agri, cultivable, irrig.Recreational

IndustrialResidential

Expected Change in Dollar Land Sales in the Next 12 Months Among NAR

Commercial Members

-5%-2%-2%

-1%-1%

0%3%

4%5%5%5%6%

Retail: MallHotel/HospitalityOffice Class ARetail: Strip CenterOffice Class B/CRetail: Free-standingSenior housingApartment Class AApartment Class B/CIndustrial: FlexIndustrial: WarehouseLand

Expected Change in Commercial Prices in the Next 12 Months Among NAR

Commercial Members

2%3%3%3%4%

5%6%6%

7%10%

Development-BrownfieldFor office/retail/hotel

Development-GreenfieldAgri, cultivable, non-irrig.

TimberAgri, cultivable, irrig.

RanchRecreational

IndustrialResidential

Expected Change in Land Prices in the Next 12 Months Among NAR

Commercial Members

©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 [email protected].

Download report at: https://www.nar.realtor/commercial-real-estate-market-survey

COMMERCIAL REAL ESTATE TRENDS & OUTLOOK April 2021

NAR RESEARCH GROUP Lead Team

Research and Analysis

LAWRENCE YUN, PhDChief Economist & Senior Vice President for Research

GAY CORORATON Senior Economist & Director of Housing and Commercial Research

BRANDON HARDIN Research Economist

MEREDITH DUNNManager, Research

ANNA SCHNERREResearch 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.

mailto:[email protected]

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

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http://www.nar.realtors/research-and-statistics

commercial real estate trends & outlook april 2021

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