OUR THOUGHTS ON:

Q4 2015 Commercial Real Estate Outlook

Real Estate

By Trevor Warren

On November 24, 2015 the National Association of Realtors released its Q4 2015 Commercial Real Estate Outlook. Some of the highlights noted in the report are as follows:

Real Estate Statistics Through Q3 of 2015

  • Gross Domestic Product (GDP) rose at an annual rate of 1.5% for the third quarter 2015 compared to 4.3% for the third quarter 2014.
  • 501,000 new jobs were added during the third quarter of 2015, bringing the year-to-date total to 1.8 million.
  • Average weekly earnings of private employees – adjusted for inflation – rose by 2.3% in the third quarter.
  • The unemployment rate declined from an average of 5.4% in the second quarter of 2015 to 5.1% in the third quarter.
  • The volume of commercial sales in large buildings market (larger than 17,000 square feet) through the third quarter of 2015 has increased by 3.0% over the same period for 2014.
  • Prices in the large building market rose 14.2% during the third quarter of 2015 from the second quarter of 2015.
  • The volume of commercial sales in the small building market (smaller than 17,000 square feet) increased 7.0% from the third quarter of 2014.
  • The average selling prices in the small building market decreased approximately 5.0% from the second quarter of 2015 to the third quarter of 2015.

Real Estate Projections for Q4 and Into 2016

  • The GDP annual rate of growth is projected to reach 2.0% in the fourth quarter and increase in the first half of 2016 to around 2.5%.
  • Unemployment is projected to fall to 4.9% during 2016.
  • Payroll employment is projected to be around a 1.7% annual growth rate for the fourth quarter of 2015 and into 2016.
  • Inflation is projected to be 1.5% during the fourth quarter of 2015 and is expected to increase to around 3.2% during 2016.
  • Commercial property vacancies are expected to continue a downward trend and are projected to average 15.6% by the end of 2015 and decline to 14.9% in 2016 with similar trends for industrial and retail property vacancies.
  • Sales volume for the large building market is expected to remain consistent from 2015 to 2016, while property prices are expected to decline slightly in 2016.

View the full report from the National Association of Realtors.   

 

 

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