Commercial real estate shaking off slump

Market Pulse – May 17 

The last two monthly NETAR Commercial Real Estate (CRE) Reports point to a sector shaking off pandemic effects and gearing up for getting back to business as usual. So far this year, the transactions trend is up 44% from last year. That’s encouraging, but since it’s a comp for today’s re-emerging market vs. a commercial section reacting to last year’s pandemic-induced shock, it’s a fuzzy number. 

A more conservative four-month growth rate comparison is this year vs. the same period in 2019. From that perspective, local transactions are up 22%. 

Office transactions continue to lead CRE deals as firms reposition themselves for the post-pandemic economy. Some are downsizing to test strategies for the work from home trend. Others are increasing size or taking advantage of better lease and location options. 

The retail and service sector also stepped up in March. There’s a lot of speculation that consumers are getting ready to go on a spending splurge. A more detailed report can be found on the NETAR Website at https://netar.us/market-pulse-may-10/  

Key drivers for a continued CRE expansion are tied to positive health outcomes and some smoothing out of local labor market frictions forcing employers to scramble for workers to accommodate expanding consumer demand.