Whether you’re looking to buy a commercial property, sell your existing one, or lease space for your retail center, it’s important to stay informed about recent changes in property market values. This should put you in a great position to negotiate and get the best possible price. If you’re a property owner or seller, you can further ensure that your property doesn’t sit in the market for too long.
To help you stay current on the commercial real estate market, we’ll provide you with an overview of the fluctuations in property market values in this guide. The insights should prove valuable for retailers.
Overview of Property Market Value Fluctuations
Commercial real estate is integral to the entire economy and encompasses property units that are used for retail, amusement, hospitality, lodging, warehousing, offices, factories and more. The importance of the sector is emphasized by the fact that the top three industries that leased large amounts of commercial space in the second quarter of 2020 included Finance, Energy, and Technology.
If you consider the bigger picture, the commercial property price index value in the second quarter of 2021 reached 194.7, with 2010 as the base year. With the exception of a negligible dip in the first half of 2016, the value of commercial property prices have been trending upwards since 2014. Let’s take a look at the situation for two most important sub-sections of in commercial real estate.
Due to a prevalence of long-term leases in the office sector, it’s much better than multifamily and retail markets. Yet, short term renewals by office tenants increased in 2020, rising from a long-standing average of 10% to 22.6%. The real question is how the property value and demand for office properties are affected by a widespread adoption of work-from-home.
Surprisingly, the retail market took off with a 1% national year-over-year asking rate and a 1.5% effective rate in the first quarter of 2021. Yet, malls remained a highly affected segment of the retail market. Vacancy rates for shopping centers and strip malls hit 11.4 percent, record-high in 20 years.
Real Estate In New Jersey, New York, and Florida
Given the insights into commercial real estate values in the past year, you should have realized that the sector is recovering fast. Stay tuned for information about residential real estate and multi-family apartment buildings. For retail vacancies, contact the leasing team at Milbrook Properties today!