There is something I have noticed throughout the year that I haven’t been able to put my finger on. In every gathering I have attended with our commercial members, the mood has been downright confident. Not to say that our residential members aren’t feeling good, but commercial real estate professionals are especially comfortable with the state of their markets.
There is hard evidence supporting your buoyant attitudes. The National Association of REALTORS® recently released the 2015 Profile of Real Estate Firms; the annual survey found that commercial firms are the most optimistic with 75 percent expecting net income to increase. That is a 4 percentage point increase over 2014. Considering recent foreign currency and economic anxieties abroad, the U.S. is much more attractive for international investment. After success at MIPIM 2015, one of the largest real estate events in the world (more on pages 14-15), NAR is planning an expanded presence in 2016 to bring your markets to a global audience.
So why else are commercial members feeling positive about the future?
One quick look at the commercial market’s key indicators tells the story. The REALTORS® Commercial Real Estate Market Survey for Q2 2015 found sales volume rose 9 percent from a year ago while sales prices increased 7 percent year over year. New job growth and low interest rates are additional factors impacting commercial real estate gains.
The numbers don’t tell the whole story. The smiles aren’t just the product of the market upswing. For those of us who have been through several cycles, we know how to navigate difficult markets. It’s what makes us professionals.
What’s different this time is that we didn’t just survive any down market; it was the worst of the worst. As commercial practitioners know better than anyone, the commercial market lags a residential recovery by up to 18 months. So while the commercial market crashed as quickly as the residential, your pain was compounded because it has taken longer to recover.
I can’t tell you how much it means to me to see our commercial members feeling so confident. I do believe that one of the reasons we made it is the camaraderie the National Association of REALTORS® offered during those dark days after the real estate crash. NAR 2011 President Ron Phipps often said it was the esprit de corps of REALTORS® that buoyed our spirits during the tough times. I agree with him. There are many quantifiable benefits of being a member of NAR, but often it is the intangible qualities—the friendships and solidarity—that are the most valuable. In belonging to something greater, we all held ourselves together.
Congratulations on your well-deserved optimism and happiness. You deserve it.