The commercial real estate market is recovering but remains weak compared to conditions before the COVID-19 pandemic, according to NAR commercial members who responded to the 2021 Q1 Commercial Real Estate Quarterly Market Survey and industry data.
Acquisitions for large commercial real estate―properties or portfolios of at least $2.5 million ― fell 28% year-over-year in the first quarter of 2021, with transactions declining across all property types, except for hotel acquisitions. Investors could be acquiring hotels to convert into other uses such as multifamily housing.
Among commercial members of NAR who participated in the quarterly market survey and whose acquisitions were typically properties or portfolios of less than $2.5 million, transactions declined by an average of 1%. Respondents reported an increase in sales of land and industrial properties and a decline in sales of other types of commercial real estate.
Commercial real estate prices continue to firm up, but the value of commercial real estate is still broadly down by 6% compared to one year ago.
A majority of NAR commercial members who responded to the 2021 Q1 commercial survey―70% ― reported that companies are leasing or moving into office with small square footage due to working from home.
The Twin Cities office vacancy rate in 2021 Q1 was 21.5%
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