Commercial market still booming despite challenges -- study

by Ryan Smith06 May 2014
The commercial market is continuing to boom despite regulatory changes and a brutal winter that slowed residential sales, according to data released today.

A survey by the National Association of Realtors shows that commercial sales, leasing, brokerage and development was on the rise last year for office and industrial space, retail buildings and multifamily. Even with the challenges in the market, commercial real estate agents saw a jump in median sales transaction volume to $2,554,700, up nearly $50,000 from 2012.

“Despite a government shutdown, regulatory changes and a budget sequestration, ongoing job creation has helped the commercial market make continued progress,” said NAR President Steve Brown. “Realtors who practice commercial real estate help build our nation’s communities by helping their clients make informed business decisions and reliable commercial investments that support economic growth. A stronger commercial market is a good indicator of a recovering and growing economy.”

Realtors surveyed reported an increase in annual gross income for the fourth year in a row, according to the NAR. The study founf that median annual gross income for 2013 jumped to $96,200 from 2012’s median of $90,200. Last year’s median gross income was the highest reported since 2008.

Pouyan Broukhim, owner of PB Financial Group in Los Angeles, said business was good for commercial lenders as well. He said now was a good time to invest in commercial real estate precisely because the market was still in a recovery phase.

“There are a lot of discounted prices, commercial properties that are available for sophisticated investors. If the investor is sophisticated enough that they know they can turn around and find a tenant for the property there’s a lot of low-risk, high-reward available,” Broukhim told MPA. “Now, they have to understand the cost of financing, but as long as they can factor that in there, they’re making a good deal. They’re buying at the right price point to make the transaction make sense for long-term purposes.”



Is TILA-RESPA a good or bad thing long term?