Economists' Outlook

Housing stats and analysis from NAR's research experts.

83% of NAR Commercial Members Expect Stable to Improving Business in 2020

Commercial members1 of the National Association of REALTORS® are upbeat about their commercial business in 2020, according to NAR’s recently released February 2020 Commercial Real Estate Market Trends & Outlook Report. Among the 690 respondents who responded to the survey, 83% expect their total commercial business to remain stable or to increase in 2020. Among all respondents, 53% reported they expect business to go up and 30% reported they expect no change in the volume of their business.  

Bar chart: How do you see your total commercial business one year from now?

Respondents have reason to be optimistic partly because of last year’s performance. Respondents reported commercial dollar sales volume rose 4% in 2019 Q4 from one year ago, new leasing dollar volume rose 3%, and commercial development (in square feet) rose 5%. Low mortgage rates helped boost the commercial real estate market in 2019. A majority of the respondents (78%) reported improving local economic conditions and easier access to debt financing (60%).

The expected improvement of trade relations between the US and China with the signing of the US-China Phase One Trade Deal on January 15, 2020, may have boosted confidence about the economic outlook of respondents.

Trends Impacting Commercial Real Estate

Demographic changes and the widespread use of technology in life and commerce is bringing transformational changes in the multi-family, industrial, office, and retail commercial properties market.  

The survey asked respondents if they are observing an increase in the following developments in their markets and more half reported “yes”.

  • 68% of respondents reported an increase in senior housing
  • 67% of respondents reported an increase in transit-oriented development
  • 58% of respondents reported an increase in apartments with smart technology
  • 62% reported an increase in coworking or flex spaces
  • 76% reported an increase in multi-tenanted office buildings
  • 71% of respondents reported an increase in retail properties that are being repurposed

Other developments are just starting to emerge, but these also present opportunities for commercial real estate members:

  • 48% of respondents reported an increase in group or coliving apartments
  •  32% of respondents reported an increase in micro-apartment units
  • 19% reported an increase in WELLcertified buildings

Investments in Opportunity Zone Funds that can invest in about 8,700  Opportunity Zones are also likely to increase in 2020 with the issuance of the final regulations by the US Treasury and IRS last December 19, 2019.

Bar chart: Observed increase in developments in primary market compared to a year ago

However, a small fraction reported improvements regarding zoning regulations (33%), hiring and cost of labor (23%)and obtaining raw materials (21%).

Bar chart: Improvement in Primary Market Conditions From One Year Ago

Commercial Outlook in 2020

In its quarterly economic outlook released January 2020, NAR expects GDP growth to pick up to 2.4%, with interest rates remaining low and an improvement in US-China trade relations that should help also lift global economic growth. With a pickup in growth, NAR expects commercial sales transactions to increase 3% in 2020 and commercial prices to increases to 2%. With higher demand from stronger economic growth, vacancy rates are likely to tighten in 2020. Multi-family and industrial will continue to be strong commercial asset classes. Vacancy rates for apartment and industrial will range between 6% to 7% while vacancy rates for office, retail, and hotel hover at 10%.

About the NAR Commercial Real Estate Market Trends and Outlook

NAR’s Commercial Real Estate Market Trends and Outlook gathers information about the commercial transactions of REALTORS® and members of affiliate organizations (CCIM, SIOR, RLI, IREM, and the Counselors of Real Estate) and the opportunities and challenges facing commercial practitioners.

The 2019 Q4 survey was sent to approximately 69,000 commercial REALTORS® and members of affiliate organizations from January 2–19, 2019, of which 844 responded to the survey. A smaller number of respondents reported their sales (538), leasing (333), and construction (310) activities.

Among sales agents who had a sale during 2019 Q4, the average sales transaction was $598,000.

Of the 844 respondents who answered the question about designations held by the respondent, 24% reported holding designations from an affiliated society, institute, or council.


1 Commercial members include REALTORS® and members of NAR’s commercial institutes/society/council, namely CCIM, SIOR, IREM, the Realtors® Land Institute, and the Counselors of Real Estate®.

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