4 CRE Stats from 2016 That Might Surprise You
Big data is driving more aspects of the business world than ever. CRE is no different and these data points and statistics can help predict what the market has in store for the future. Not only does it help predict, but it also helps to show what is happening and what is working for businesses.
Here are some statistics from 2016 about commercial real estate that might surprise you.
In the beginning of 2016 vacancy rates were expected to surge, but they remained low throughout the year. While still rising to 4.4 percent from 4.2 percent, they did not see the increase that was expected to come in the beginning of the year. This was due to job numbers increasing as well as many apartment projects not starting within the year. However, these starts are expecting to slide into 2017 so vacancy rate increases should be expected this year.
Surprisingly Phoenix and Chicago beat out some of the top real estate markets in the country when it came to office space. Phoenix saw 3.14 million net square feet of office space in 2016 just under Chicago at 3.16 million. This contrasts with Manhattan seeing a negative net lease of office space at -1.56 million square feet due to office moves.
As Phoenix continues to be an affordable market this can be an indicator of the desire for companies to be in more affordable areas not only for the cheaper office space but also for more affordable living for employees.
2016 saw a decline in investment sales volume by 11 percent from 2015. Despite the decline, it was still a record year but did not live up to the record of 2015. An interesting note which is like the number two statistic is that much more of the volume shifted to secondary markets instead of primary markets.
The only sector to see an increase in investment sales from 2015 was the multifamily market which increased by $5 billion in 2016. Demand continues to grow in multifamily which is what was driving this growth in 2016.
The energy market was volatile in 2016 with oil hitting a 13 year low of $27 a barrel. This was due to overproduction and minimal reduction in production as well. This is having effects on commercial real estate in two different ways.
For markets that are dependent on the energy industry it means that there is less money to be spent and could even see reduction in jobs thus possibly resulting in lower demand for property or multifamily. On the other hand, for metropolitan areas this means that consumers are seeing reduction in prices for energy and thus have more money to be spending resulting in higher retail sales and possibly spending more money on rents which is a good thing for these commercial markets.
Keeping an Eye on the Market
What statistics are you keeping an eye on as we roll full steam into 2017? Share them with us in the comments below!