The Commercial Real Estate Lending Survey is conducted annually and provides an overview of lending conditions that impact commercial transactions nationally, based on responses from commercial real estate members.
According to the first Urban Land Institute/EY Real Estate Consensus Forecast of 2014, commercial real estate fundamentals are projected to continue improving. Vacancy rates are expected to decline for office, industrial and retail properties, while availability for apartments is estimated to rise. Commercial rents are poised to rise for the four core property types in 2014 in the 1.9 percent to 3.8 percent. In 2016, rent growth is projected to range from 2.2 percent to 3.6 percent.
On the investment front, sales volume is forecast to exceed the 2006 volume by 2016, totaling $430 billion. The ULY/EY forecast estimates that Institutional assets will offer total returns of 9.4 percent in 2014, and moderate to around 8.5 percent by 2016.
As a significant portion of the data underpinning ULY/EY’s forecast is aggregated at the top end of transactions—above $2.5 million—it points to a brighter commercial environment, especially for top-tier markets. With 90 percent of commercial REALTORS® managing transactions valued at or below $5 million, and mainly located in secondary and tertiary markets, the 2014 Commercial Real Estate Lending Survey shines the spotlight on a significant segment of the economy which tends to be somewhat obscured.
Five years after the Great Recession, lending conditions in REALTOR® markets show signs of sustainable recovery. With commercial real estate fundamentals and investment prices on a solid upward trend, lending conditions eased as financing sources broadened in 2014.
Highlights from this month’s report include:
- Store Closings Expected to Moderate, Closings to Rise Significantly
- Dollar Stores and Accessories Chains To Be Among Most Aggressive This Year
- Electronics & Office Supply Stores Remain Cautious On the Year Ahead
- Heightened Competition Spurs Remodeling Activity Among Children’s Apparel, Shoe Retailers
The REALTORS® Commercial Real Estate Market Survey measures quarterly activity in the commercial real estate markets. The survey collects data from commercial REALTORS®. The survey is designed to provide an overview of market performance, sales and rental transactions, along with current economic challenges and future expectations.
2014.Q2 Survey Highlights
- 64% of commercial REALTORS® closed a sale.
- Sales volume rose 7% from a year ago.
- Sales prices increased 3% year-over-year.
- Cap rates averaged 8.3% during Q2.14.
- Leasing volume advanced 4% from previous quarter.
- Leasing rates increased 3% over previous quarter.
- Concession levels declined 5% on a quarterly basis.
- Inventory shortage topped the list of current challenges, followed by a tie between pricing gap and local economies.
- The estimated average transaction stayed level at $1.4 million in Q2.14.