Commercial real estate space is heavily concentrated in large buildings, but large buildings are a relatively small number of the overall stock of commercial buildings. In terms of inventory, commercial real estate markets are bifurcated, with the majority of buildings (81 percent) being relatively small (SCRE), while the bulk of commercial space (71 percent) is concentrated in larger buildings (LCRE). The bifurcation continues along transaction volumes as well, with deals at the higher end—$2.5 million and above—comprising a large share of investment sales, while transactions at the lower end make up a smaller piece of the pie.

Data are readily available for transactions in excess of $2.5 million from several sources, including Real Capital Analytics (RCA). However, in general, data for smaller transactions—many of which are handled by REALTORS®—are less widely available. NAR’s Commercial Real Estate Market Trends gathers market information for SCRE properties and transactions, mostly valued below $2.5 million.

Commercial real estate sales volume in LCRE markets posted a 3 percent year-over-year increase, totaling $115 billion during the third quarter of 2015, based on RCA data. The pace of deals has been declining steadily during 2015, with each successive quarter posting smaller year-over-year increases.

In SCRE markets sales advanced, with REALTORS® reporting rising investment volume.  Sales of commercial properties during the second quarter rose 7.0 percent on a year-over-year basis.

sales vol

Prices in LCRE markets rose by 14.2 percent during the third quarter of this year, based on RCA’s Commercial Property Price Index. The advance was driven by strong appreciation in prices of apartment and CBD office properties, both of which have exceeded their prior 2007 peaks.

Price growth moderated in SCRE markets during the third quarter of 2015, with properties trading at 3.8 percent higher average prices compared with the same period in 2014.  The average transaction price decreased from $2.0 million in the second quarter 2015 to $1.9 million in the third quarter 2015.

sales prices

To access the latest Commercial Real Estate Market Trends report, visit: http://www.realtor.org/research-and-statistics/commercial-real-estate-market-survey.