The commercial market is hot this year. It’s taking less time to sell commercial properties, and sellers are making the greatest profits noted since 2006. What’s more, this boom is reaching beyond the larger markets like New York and San Francisco, and impacting Midwestern cities including St. Louis.
According to data compiled by Real Capital Analytics, volume in commercial real estate – structures such as office buildings, malls and apartment complexes priced above $2.5 million – grew 36 percent compared to the same time last year. And, at $225.1 billion, transactions are outpacing those recorded in 2006. The study also found that sales figures are $2.4 million higher than they were in the first half of 2014, in addition to including 2,340 more commercial property transactions – a significant increase in both quantity and price.
Markets like those in Atlanta, Chicago, Dallas, Los Angeles, New York and San Francisco saw the greatest increase in transactions, enjoying totals that are 42 percent higher than this time last year.
However, smaller markets are enjoying even greater increases. Places like Palm Beach, Raleigh/Durham, San Antonio and St. Louis are up roughly 50 percent over last year. All of the deals and demand is resulting in higher prices, driving the market to levels above what commercial real estate reached before the financial crisis.
The hottest properties in the second quarter included industrial assets and suburban offices. Those sectors reflect volume growth at or near 40 percent, and a cap rate of roughly 7 percent. Even the bottom tier of the boom, which includes properties such as apartment complexes, saw modest volume growth at 13 percent.
So, what does this growth mean for commercial real estate investors and developers? As the market reaches new heights, there are greater opportunities for yield today and good news for gains in the future. Contact the professionals at Intelica Real Estate today to review your assets and make the most of the market upturn.