CHICAGO- The Certified Commercial Investment Member Institute issued a report this week that shows the commercial real estate industry continued to experience robust growth in 2012. The boost in activity was even more notable in the year's final quarter. The Chicago-based institute, an affiliate of the National Association of REALTORS®, based the report on the findings of their 13,000 members.
Commercial real estate investment sales increased for the fourth consecutive year, the institute finds, and in properties worth less than $2.5 million, increased 18 percent over the previous year's total. Perhaps most impressive was the fourth-quarter's total sales of $98 billion, the most seen in a final quarter since 2007.
"The numbers speak clearly, particularly the figures besting recession-era data, demonstrating dependable progress that investors can act upon, and fundamentals are expected to steadily improve," said George Ratiu, manager of the National Association of REALTORS® qualitative and commercial research, in a prepared statement. "With moderate gains in employment and consumer spending, absorption for office, industrial, and retail spaces will continue to grow, driving availability rates lower."
Other findings include:
- Property prices have stabilized in most markets, with 30 percent of respondents reporting price increases and 50 percent saying property prices remained the same in their markets.
- Apartments attracted the largest volume of investment dollars in 2012, followed by office,
retail and industrial properties. The institute predicts that apartment demand will continue on a strong upward trajectory in 2013 as household formation increases and home supply lags in most markets. - Real estate prices gained traction across all commercial real estate categories, with a 12 percent year-over-year increase across all sectors.
- Forty percent of members who responded to the survey reported flat rents in 2012, while 32 percent indicated rents rose in their markets. Approximately 53 percent of respondents expect rent growth and price growth to become more in line this year.
- Capitalization rates remained stable year-over-year, according to 62 percent of respondents. In addition, 49 percent reported that cap rate gaps between buyers and sellers decreased, and the trend will continue in 2013.
The complete report findings can be found here.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
