According to NAR's quarterly market survey of commercial members, sales transactions declined an average of 3% year over year in the third quarter of 2020. Around 650 commercial members took part in the survey.
Sales volume by property type
Predictably, land, industrial and residential property sales emerged the healthiest from the blow of the pandemic on the commercial real estate business. In fact, land and industrial warehouse sales transactions remained largely unchanged. The largest decline was recorded in acquisitions of shopping centers (minus 7%), shopping centers (minus 5%), class A office properties (minus 5%) and freestanding retail stores (minus 4%). Industrial flex real estate and housing sales deals fell by just 1%.
Increase in e-commerce and mail order
Accelerated online shopping and mail order sales have spurred demand for industrial real estate, accounting for 15% of retail sales as of August. That was a 13% increase at the start of the year, representing an annual increase of around $ 100 billion.
Leasing transactions
In terms of leasing transactions, REALTORS® recorded a decline for all property types with the exception of industrial properties, where the leasing volume was slightly higher. The leasing volume in shopping centers fell by 9%. Leasing activity, including renewals and new leases, for office space among respondents decreased by 2% year-on-year. REALTORS® reported that the rental space of Class A office buildings decreased, on average, from nearly 10,000 square feet in the second quarter of 2020 to just under 8,000 square feet in the third quarter. In Class B / C office buildings, the average rental space decreased from approximately 8,000 square feet in the second quarter to 4,000 square feet in the third quarter.
Net absorption
Regardless, Cushman & Wakefield saw a larger drop in occupancy (negative net absorption) in the third quarter than in the second quarter among office and retail residents. Office use declined 41 million square feet and retail occupancy decreased 13.6 million. However, occupancy in industrial plants rose by 62 million square meters.
The demand for recreational land is strong
With the pandemic of recreational activities such as eating out and going to the theater and cinema, outdoor or natural recreational activities seem to have increased, as the demand for recreational land shows. (A land transaction is any transaction where the value of the land, including agricultural improvements, is at least 51% of the total sales of the transaction.) Since the pandemic, demand for homes outside of the cities has grown, leading to an increase in sales of Residential lots leads. On average, respondents said that sales of residential land increased 6% year over year and sales of recreational land increased 5%.
