Report Shows Healthy Outlook for CRE Markets

A new report from Auction.com was released this week, Q2 2014 Commercial Real Estate (CRE) Market Monitor Report, which reflects year-over-year growth in all major sectors as real estate transactions trend in a positive direction with volume and pricing moving upward. According to the report, the total combined commercial volume in the office, retail, apartment, industrial and hotel sectors reached $81.6 billion in the second quarter of 2014, up nearly 14% from one year ago. Office and apartment transactions combined to account for more than 55% of the five-sector total, similar to one year ago, though the apartment sector's portion of that volume has shrunk. Meanwhile, retail transactions made up 16% of the total.

"The picture continues to brighten for the commercial real estate market, as more investors take advantage of the current low-interest rate environment and drive transaction volume and pricing upward across all of the major sectors," said Auction.com Executive Vice President Rick Sharga. "Even the sectors that are beginning to level out in terms of transaction growth are performing better than they have in the past five years."

Additionally, pricing is on a steady upward trend across all sectors, with industrial pricing leading the way in terms of gains. A 15% year-over-year increase in May 2014 elevated the industrial sector's price growth to second among the sectors -- right behind hotel, which has averaged between 15 and 20% year-over-year growth since June 2013. The retail sector saw a surge in price growth in 2013, similar to what industrial is experiencing now, but year-ago gains have begun to decelerate in recent months as the sector continues to face headwinds including the rise of online shopping and shrinking space needs per customer.

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