Key Highlights

  • Land and industrial sales and leasing two bright spots within commercial market sector
  • Hotels, retail and office properties continued to decline

The Q4 2020 Commercial Real Estate Quarterly Market Survey of REALTORS® pointed to land and industrial sales and leasing as the two bright spots in the commercial real estate sector both in Q4 2020 and into 2021.

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REALTORS® report that sales volume for all commercial property types except land and industrial declined in Q4 2020

Reported in the January 2021 Commercial Market Trends and Outlook Report, the Q4 2020 Commercial Real Estate Quarterly Market Survey of REALTORS® indicated that sales volume of all commercial properties priced below $2.5M were down -2% y/y.  Real Capital Analytics indicated that sales of commercial properties priced at least $2.5M plummeted -56% y/y

Land and Industrial Property-Types Increased Sales

The strongest increases in sales transactions within the commercial sector of the market during Q4 2020 were in land and industrial properties. Land sales transactions increased by +3%.  Strongest gains within land transactions were recreational (camping), ranches and residential land.  Industrial property sales increased +1%.

Sales volume of hotel/hospitality properties was down an average of -5%.  This makes perfect sense since some 46% of businesses in hospitality and food services were operating at just 50% capacity compared to one year ago.  Sales volume for office and apartment properties was down from -1% – -2%.  This also makes perfect sense since some 25% of the workforce was (and is) working remotely from home.

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Leasing Activity for Industrial Properties Increased in Q4 2020 while all other commercial property types saw decreases

 Industrial properties such as warehouses made it through Q4 2020 with a +1% increase in leasing activity.  Rising demand for online shopping during the COVID pandemic was the driving force behind that increase.

Apartment and office leasing activity both declined in Q4 2020 by -1%.  The only surprise in this property sector is that leasing activity in Q4 was not down more than -1%.

Sales Expected to Increase for Land, Industrial Properties and Apartments for Q1 2021

 According to the US Census Bureau Business Pulse Survey recently released, sales transactions are expected to increase for land (+5%), industrial warehouse (+3%), industrial flex (+2%), and land properties (+1%) in Q1 2021.  Senior housing is expected to remain flat.  All other commercial property sales are expected to decline between -1% to -3% during Q1 2021.

Thanks to the National Association of REALTORS®.

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