Key Highlights

  • According to the National Association of REALTORS®, commercial dollar sales volume increased +4% in Q4 2019
  • New leasing dollar volume up +3%
  • Commercial development in square footage increased +5%
  • Sales price growth up +3%
  • Industrial, warehouse, flex, apartment and office Class A had lowest cap rates with a median of 6.5%
  • Retail trade industry median cap rate +6.5%
  • In November 2019 retail trade increased +15,300 net jobs from one year ago

The National Association of REALTORS® (NAR) just released its 2020 Commercial Real Estate Trends and Outlook Report. All data noted here has been generated from this report.

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Vacancy rates nationwide in commercial real estate trended down in Q4 2019. The average vacancy rate was 7.3% in Q4 2019. The highest vacancy rates were in office and retail, 10% and 9% respectively. The lowest vacancy rates were in multi-family at 4% and industrial at 5%.

New construction was up +5% in Q4 2019. What stimulated that new construction?

  • 60% – ability to obtain debt
  • 57% – equity financing
  • 33% – zoning improved
  • 23% – hiring and cost of labor
  • 20% – cost of materials

Where will this new construction be?

  • 73% – outside central business district
  • 71% – repurposing retail malls
  • 68% – senior housing
  • 67% – transit oriented development
  • 62% – co-working spaces
  • 58% – smart homes
  • 53% – Opportunity Zone areas
  • 48% – group living
  • 43% – LEED certifications
  • 32% – parking free apartments
  • 32% – micro apartments
  • 19% – WELL certifications

NAR projects the following:

  • 4% GDP growth
  • 3% increase in commercial sales
  • 2% increase in commercial prices
  • 6-7% vacancy rates for apartment and industrial commercial properties
  • 10% vacancy rates for office, retail and hotel commercial properties
  • 53% experts expect more commercial business transactions in 2020 with demand particularly strong in San Francisco, Los Angeles, Seattle, Salt Lake City and Washington DC.

NAR questioned experts about improved conditions in primary markets:

  • 78% – local economic conditions
  • 75% – national economic conditions
  • 60% – obtaining debt
  • 57% – equity financing
  • 33% – zoning
  • 23% – cost of labor
  • 21% – cost of materials

Thanks to the National Association of REALTORS® for all source data noted here.

Also read: Economists Say 2020 To Side Step Recession, 2020 Real Estate Market Predictions, Origins of Our Nation’s Inventory Crisis – And, Now What?