REALTORS® quarterly fourth quarter 2020 commercial property market survey shows the commercial property market continues to struggle, but some sectors are holding up relatively well against the economic impact of the pandemic. Land and industrial property sales and leasing increased while hotels, retail and office properties decreased. The survey results will be published in the Commercial Market Trends and Outlook Report of January 2021.
Land and industrial property sales are increasing while other property types are falling
REALTORS® reported that revenue acquisitions decreased for all property types except land and industrial properties. REALTORS® reported that fourth quarter revenue transaction volume declined an average of 2% year over year. NAR trading members transactions are typically under $ 2.5 million (small trading market). Real Capital Analytics recorded a 56% year-over-year revenue decline on transactions of $ 2.5 million or more.
By property type, REALTORS® saw the largest increase in land sales transactions at 3%, followed by sales / acquisitions of industrial real estate, which increased 1%. Among the land transactions, the greatest gains were made in the sale of recreational land (e.g. for camping), ranches and residential properties. This could be related to increased interest in land outside of urban centers as a result of the COVID-19 pandemic.
REALTORS® recorded an average decline in hotel / hotel property sales transactions of 5%, as 46% of companies in the hospitality and accommodation sector have only half the capacity compared to the previous year1. And with around 25% of the workforce still working from home2, REALTORS® sales transactions for office and residential property decreased by 1% to 2%.
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Industrial real estate leasing activities are increasing, while office and apartment leasing is decreasing
REALTORS® reported that leasing activity has decreased for all property types, with the exception of industrial properties, which increased 1%. The demand for industrial space has been spurred by sales due to the increasing demand for electronic shopping. Retail sales grew 23% in 2020 (around $ 163 billion more) from 2019.
However, leasing transactions for apartments (-1%) and office buildings (-1%) fell; With one in five workers still working from home, there is slower demand for rental contracts for apartments and offices.
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Overall, the industrial sector will continue leasing activity in 2020 with the increase in net rent offsetting the decrease in net rental losses in the office space. On a net basis, 268 million industrial space was occupied in 2020 compared to 2019, offsetting the loss of 98 million square feet of office space vacated in 2020.
<img src = "data: image / svg + xml; utf8,"data-src =" https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/economists-outlook-net-absorption-of-industrial-and-office-space-in-million- Square-feet-2012-to-2020-bar-chart-01/21/2021-1300w-784h.png? itok = Oh_5-rzH "class =" b-lazy "width =" 1200 "height =" 724 "alt =" Bar chart: Net consumption of industrial and office space in million square feet, 2012 to 2020 "title =" Bar chart: Net consumption of industry – and office space in millions of square feet, 2012 to 2020 "/>
Positive revenue outlook for industrial, apartment and land sales in the first quarter of 2021
In the next three months, REALTORS® expects an increase in sales of industrial real estate, apartments and land. The demand for hotels, retail stores, and office properties is expected to continue to decline, with the risk of COVID-19 infection remaining until the vaccine is widely used to achieve herd immunity. President Biden's plan is to give 100 million vaccine shots in 100 days, which is about 30% of the population. Studies show that 70% of the population must be vaccinated to achieve herd immunity.
<img src = "data: image / svg + xml; utf8,"data-src =" https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/economists-outlook-commercial-sales-volume-in-2021-q1-compared-to-2020- q1-bar-chart-21.01.2021-1300w-790h.png? itok = dC8XFkBc "class =" b-lazy "width =" 1200 "height =" 729 "alt =" Bar chart: Commercial sales volume in the first quarter of 2021 compared to the first quarter of 2020 "title =" Bar chart: Commercial sales in the first quarter of 2021 in Compared to the first quarter of 2020 "/>
1 Source: US Census Bureau Business Pulse Survey, week of January 9, 2021, downloaded from Haver Analytics
2 Source: US Bureau of Labor Statistics, COVID Supplement Survey December 2020, https://www.bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm