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Year-End Delivery Data Bodes Well Across CRE Sectors

January 25, 2016

While the buzz has been heavy around the multifamily sector’s favored status among developers over the past year, other types of commercial construction are making a move, and possibly shifting the market toward a focus on hospitality and industrial growth.

According to real estate information company CoStar, year-end construction data reveals that the hotel sector, followed by logistics and other industrial buildings, is poised to rival the strong state of apartment construction moving forward. The firm reports that 33.9 million square feet of hospitality properties was completed domestically last year, comprising 1.12% of total stock. That figure is up more than 25 percent from 2014, and the growth comes close to matching the multifamily sector’s pace of 2.79 percent of stock currently under construction.

Trailing closely behind, the industrial sector delivered 239.4 million square feet in 2015, accounting for 0.96 percent of existing building stock. That figure that is up by 26.5 percent over the totals from 2014, when industrial builds accounted for 0.76 percent of inventory. The same study reports that an additional 223.5 million square feet of logistics, light industrial and flex space were under construction as of December 31.

As a result of increases across total commercial real estate deliveries in the five major commercial property types, total space under construction as of the end of 2015 came in nearly 14 percent above 2014 year-end levels, totalling more than 818 million square feet.

The only sector that did not see a significant annual gain in deliveries last year was retail. However, with retail still early in its recovery cycle and processing give backs from closings, it is likely that 2016 will begin to reflect the economic growth other sectors are already enjoying.

If you’re looking for the right opportunity to expand your commercial real estate portfolio, the professionals at Intelica CRE are ready to help you make the most of market growth. Contact us today to review your options.