Average Asking Prices Drop the Most Since Pandemic’s Start
Sellers and brokers are using the market as their pricing mechanism to begin negotiations.
Average asking prices per square foot across all CRE property types dropped the most in February since the pandemic began a year ago, according to new data released by commercial database Crexi. At the same time, the average square footage of listings went up. Newly listed asking price averages decreased 7.34% over January numbers, owing in part to some listings being marked as “unpriced,” while square footage across asset classes rose by 11.2%.
“Just as in the early months of COVID, sellers and brokers are preferring to use the market as their pricing mechanism to begin the negotiation,” Crexi analysts write in the firm’s National Commercial Real Estate Report for February 2021. “This trend had been generally reverting back to pre-COVID levels of unpriced listings, but seems to have returned in earnest in February.”
Amid those pricing drops, however, retail and land values stayed steady and were the only asset class that didn’t see a noticeable drop in the average asking price per square foot for new listings. Multifamily and office were hit the hardest, with the former showing a 16.8% decline month-over-month in deal volume driven by larger, cheaper listings coming online.
The decline in office pricing is likely related to an increase in unpriced listings, Crexi maintains, and is likely indicative of sellers’ desire to move pricing discussions to later in the deal pipeline. It may also reflect off-market transactions, which have generated serious interest since August.
Gas stations and hotels both saw major upticks in the amount of new listings last month, with the number of gas stations listed on Crexi increasing by 23.7% over January figures and hotels for sale rising 26.6% month over month.
Nearly 25% more for-lease listings were added to Crexi in February than in January, the most in Crexi’s history, with average asking rates growing 3.94%. These numbers also suggest a decrease in average square footage of new for-lease assets being added to the platform. Of those, retail and office showed the largest inventory increases.