Confidence Rising Among Industrial And Office Specialists
“Not since Q2 2018 were these levels seen.”
Confidence is rising among industrial and office specialists, according to a new survey from the Society of Industrial and Office Realtors (SIOR).
Combined confidence for industrial and office realtors polled in the fourth quarter climbed to an average of 7.7 out of 10, the highest since the second quarter of 2020.
Confidence in the industrial market reached 8.2 with office coming in at 6.4, the second highest since the start of the pandemic.
Overall asking rents rose 11% in the fourth quarter with 83% of the CRE realtors reporting higher rents. The increase brought asking rents closer to pre-pandemic levels.
Nearly all industrial specialists (96%) said they were asking higher rents with 48% of office realtors saying, as well, they were asking for increases, a 55% hike from the third quarter of 2021.
With the increase in rents, available vacancies hit their lowest levels in years with 73% of the realtors reporting low available vacancies up from 68% in the third quarter.
“Not since Q2 2018 (when it was 74%) were these levels seen,” the study said.
With vacancies down, CRE development was up.
For industrial realtors, 80% reported seeing heavy development, an increase from 74% in the previous quarter while 41% of office realtors reporting average or booming development conditions, up from 27% a quarter earlier.
With development, nearly all industrial realtors felt sellers hold the upper hand in sites for development with 97% citing increased prices and a seller’s market. This was up from 91% in the last quarter.
At the same time, there was a slight decline in office specialists reporting a seller’s market, 53% down from 56%.
Tenant concessions remain higher in the office sector.
Sixty percent of office realtors reported deep discounts and a favorable tenant market while just 2% of industrial specialists thought their sector was a tenants market.
A year ago deep in the pandemic, a SIOR Snapshot Report showed waning investor confidence alongside strong transaction volume.