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Commercial Real Estate Trends & Outlook April 2021

Commercial Real Estate Trends & Outlook April 2021

Commercial Trends & Outlook April 2021 National Association of REALTORS® Research Group COMMERCIAL & OUTLOOK April 2021 Report

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 data.

Acquisitions for large commercial real estate― or portfolios of at least $2.5 million ― fell 28% year-over-year in the first quarter of 2021, with transactions declining across all types, except for acquisitions. Investors could be acquiring 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 with small square footage due to working from .

The commercial real estate market’s recovery will remain uneven in 2021. Commercial members of NAR who responded to the survey anticipate a modest increase in sales of land (5%), industrial warehouses (3%), and Class B/C (1%), but anticipate a decline in sales transactions of , office, and hotel/hospitality properties in the next 12 months.

However, commercial real estate transactions should experience a stronger recovery across all sectors in 2022 as more businesses operate at normal capacity, a larger fraction of the workforce returns to the office, and as business and leisure travel picks up strongly in 2022 with the broad swath of the population fully vaccinated, and assuming there is no resurgence of deadlier COVID-19 variants.

Enjoy reading the latest report! 1 | COMMERCIAL SALES

Commercial Sales Transactions Down 28% from One Year Ago Quarterly Sales Volume (YoY % Change) as of 2021 Q1 As businesses continue to operate below normal 40% capacity and with people and businesses still 20% holding back on travel and recreation with COVID-19 vaccinations still underway, 0% -1% commercial sales transactions continued to -20% decline in the first quarter of 2021. -40% -28% Commercial transactions of $2.5 million and -60% above decreased 28% from one year ago, -80% according to Real Capital Analytics. Transactions were down across all property types except for 2019.Q1 2018.Q1 2019.Q3 2019.Q2 2018.Q3 2018.Q2 2020.Q1 2019.Q4 2018.Q4 2020.Q3 2020.Q2 hotel properties where acquisitions rose 13%. 2020.Q4 Investors could be acquiring some hotels to be REALTOR® CRE Markets $2.5+M Market converted into other uses, such as multifamily housing. accounted for a third of the closed transactions. $2.5 Million or More Transactions Q1 '21 In the small CRE market where transactions are less than $2.5 million, NAR commercial Vol ($b) YOY members who participated in the 2021 Q1 Office 20.5 -36% Commercial Real Estate Quarterly Survey Retail 7.8 - 42 % reported that their sales transactions volume in Industrial 19.6 - 41 % the first quarter of 2020 contracted on average Hotel 5.6 13% by 1% compared to the level one year ago. Respondents reported an increase in Apartment 35.5 -12% acquisitions for industrial properties and all Seniors Housing & Care 3.3 -8% types of land, with strong growth in sales of Dev Site 4. 3 - 40 % residential and industrial land. Total 96.7 -28% Real Capital Analytics

YoY % Chg of Land Sales Among NAR YoY % Change in the Dollar Commercial Commercial Members in 2021 Q1 Sales Volume in 2021 Q1 Among NAR 7% Commercial Members

5% 6% 4% 4% 3% 2% 1% 2% 1%

3% 2% 1% 0%

-1% -1% -2% -2% -3% -3% -3% -4%

® NATIONAL ASSOCIATION of REALTORS | RESEARCH GROUP | www.nar.realtor/research-and-statistics 3 1 | COMMERCIAL SALES

For deals of $2.5 million or more, Boston, Dallas, Los Angeles, Atlanta, and Phoenix Commercial Transactions of $2.5M or closed the most deal volume in the first Over Closed in 2021 Q1 in Billion Dollars quarter of 2021. Except for Boston, the top five markets are all non-gateway cities. Boston $6.6 Dallas $5.8 In Boston, the bulk of the deals were for Los Angeles $4.7 office properties. In Dallas, Los Angeles, Atlanta $4.3 Atlanta, and Phoenix, a large component Phoenix $4.3 was for apartment properties. Seattle $2.8 Houston $2.6 Distressed Sales at 2% of Total No NJ $2.2 Transactions $2.2 Austin $2.2 Among transactions of $2.5 million or over, San Francisco $2.0 distressed sales accounted for less than 2% Denver $1.9 of sales. Despite the rise in vacancy rates, Miami/Dade Co $1.8 there are little distressed sales compared to East Bay $1.6 the Great Recession when distressed sales Manhattan $1.6 made up nearly 20% of sales. One reason is San Jose $1.5 that investors like REITS are less leveraged Baltimore $1.5 this time compared to the Great Recession. Inland Empire $1.5 During the Great Recession, the debt to Orange Co $1.5 total market capitalization (debt plus San Diego $1.4 equity) of equity REITS market hit a peak of Charlotte $1.3 1 57.5%. As of March 2021, the debt to equity Orlando $1.2 2 ratio is at 32.3%, according to Nareit. DC VA burbs $1.2 Tampa $1.1 Palm Beach Co $1.1 Distressed Sales as a Percent of Total Portland $1.1 Sales of Properties $2.5 Million or Over Richmond/Norfolk $1.1 25.0% NYC Boroughs $1.0 Salt Lake City $1.0 20.0% Real Capital Analytics 15.0%

10.0%

5.0% 1.8% 0.0% 11Q1 13Q1 15Q1 12Q1 21Q1 17Q1 16Q1 19Q1 18Q1 14Q1 10Q1 20Q1 07Q1 09Q1 08Q1

Real Capital Analytics

1 Nareit, https://www.reit.com/news/blog/nareit-media/equity-reits-have-lowest-debt-ratio-20-years 2 Nareit, https://www.reit.com/sites/default/files/2021-04/MediaFactSheet_Mar-2021.pdf

® NATIONAL ASSOCIATION of REALTORS | RESEARCH GROUP | www.nar.realtor/research-and-statistics 4 2 | COMMERCIAL PRICES

Commercial Prices are Recovering But Still Down 6% Y/Y % Change in Commercial real estate prices continue to Prices firm up, but the value of commercial real 10.0% estate is still broadly down by 6% compared 6.7% 5.0% to one year ago, based on the Green Street 2.0% Commercial Price Index, an appraisal-based 0.0% index of the properties held by REITs. The -5.0% decline has tapered off from the 10% decline -5.6% in the second quarter of 2020. -10.0% -15.0% Among closed transactions valued at $2.5 million or over, sales prices rose 6.7% from one year ago, according to Real Capital 2021.Q1 2019.Q1 2018.Q1 2019.Q3 2019.Q2 2018.Q3 2018.Q2 2020.Q1 2019.Q4 2018.Q4 2020.Q3 2020.Q2 Analytics. 2020.Q4 REALTOR® CRE Markets % Chg Y/Y Among closed transactions of NAR $2.5M+ Market commercial members which are typically Green Street below $2.5 million, sales price rose by 2% on average. Respondents reported strong price gains for land (+6%), industrial warehouses (+5%), and class B/C apartments YoY % Change of Sales Prices of (+5%). Sales prices of residential land were Commercial Acquisitions Typically up 9% on average, according to NAR Below $2.5 Million in 2021 Q1 commercial members. 6% 5% 5% 5% YoY % Change in Land Sales Prices in 3% 2021 Q1 For Properties Typically Below 2% 2% $2.5 Million

9%

-1% -1% -1% 6% -2% 6% 5% 4% 4% -4% 4% 4% 3% 2%

NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 5 2 | COMMERCIAL PRICES

Cap Rates on the Decline

As commercial prices continue to firm up, cap Cap Rates in 2021 Q1 rates continued to decline. Apartment acquisitions had the lowest cap rate of 4.9%, Properties $2.5 M or More followed by industrial at 5.9%. Hotel properties Office 6.6% had the highest cap rates, at 8.6%. Office cap rates Industrial 5.9% were at 6.6% . Retail 6.7% Risk spreads (cap rate less 10-year T-note) for Apartment 4.9% office, retail, industrial and hotel have also trended downwards and cap rates are now at Hotel 8.6% about the same level in 2021 Q1 compared to one Seniors Housing & Care 7.0% year ago. However, the market is still thin so these Source: Real Capital Analytics cap rates reflect transactions that are likely of prime properties or that are expected to yield good cash flows when redeveloped or put to other uses than the current revenue flows at the Cap Ratesfor in 2021 Q1 existing use. Properties Typically Less than $2.5 M The cap rates for properties typically below $2.5 Office: Class A 6.5 million tend to be higher than cap rates of properties that are typically valued at $2.5 million Office: Class B/C 7.2 or over. NAR commercial members reported the Industrial: Warehouse 6.8 lowest cap rate for Class A apartment properties, at 5.7%, on average. Office acquisitions had a cap Industrial: Flex 6.8 rate of 6.5% on average. Hotel and retail mail Retail: Strip center 7.1 acquisitions had the highest cap rates, at over 8%, on average. Retail: Mall 8.1 Retail: Free-standing 6.8

Risk Spreads for Properties $2.5 Million or Apartment: Class A 5.7 Over (Cap Rates Less 10-Year T-Bond) Apartment: Class B/C 6.4 10.0% Hotel/Hospitality 8.2 8.0% Senior housing 7.5 7.3% Land 6.0 6.0% 5.3% Source: 2021 Q1 NAR CRE Market Survey 4.5% 4.0% 3.6% For $2.5 million or less properties 2.0%

0.0% 11Q3 13Q1 Apartment Industrial16Q1 19Q1 01Q1 10Q1 17Q3 14Q3 07Q1 04Q1 05Q3 02Q3 20Q3 08Q3 Retail Office Hotel

Source: Real Capital Analytics

NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 6 3 | LEASING

Leasing Activity for New and Renewals Continues to Fall in 2021 Q1 YoY % Change in Commercial Leasing Dollar e Among NAR Commercial For the fifth consecutive quarter, the dollar Members volume of new leases and renewals among 12.0% properties leased or managed by NAR 10.0% commercial members who responded to the 8.0% survey fell by 2% on average in 2021 Q2. 6.0% 4.0% Office Continues to Fall While 2.0% Industrial Occupancy Rises in 2021 Q1 0.0% -2.0% For the fourth consecutive quarter, office -4.0% -2% absorption was negative (-41.1 MSF), bringing -6.0% the total negative net absorption since 2020 Q2 to 138.4 million square feet (MSF), 2021.Q1 2019.Q1 2018.Q1 2019.Q3 2019.Q2 2018.Q3 2018.Q2 2020.Q1 2019.Q4 according to Cushman and Wakefield market 2018.Q4 2020.Q3 2020.Q2 2020.Q4 data. Office vacancy continued to rise to 16.4% from 13% in 2020 Q1.

On the other hand, occupancy in industrial Net Absorption (Million Square Feet) spaces rose 82.7 million square feet in 2021 Q1 and Office Vacancy Rate and totaled 309.7 million square feet during in 50.0 20.0% 40.0 18.0% the past four quarters. The increase in 16.4% industrial absorption offsets the negative net 30.0 16.0% absorption in the office sector (-138.4 million 20.0 14.0% square feet (MSF). 10.0 12.0% 0.0 10.0% -10.0 8.0% -20.0 6.0% Absorption of Industrial Space -30.0 4.0% and Vacancy Rate -40.0 2.0% -50.0 0.0% 120 12.0% 100 1995 Q1 1995 2016 Q1 2012 Q3 2019 Q3

10.0% 1998 Q3 2014 Q2 2002 Q1 2017 Q4 1996 Q4 2009 Q1 2010 Q4 2005 Q3 2005 2007 Q2 2003 Q4 80 2000 Q2 Millions 60 8.0% 40 Sources: Cushman and Wakefield 20 6.0% 0 4.0% -20 -40 2.0% 1995Q1 2013 Q1 2013 2015Q2 1997 Q2 2017 Q3 1999 Q3 1999 2019Q4 2001Q4 2004Q1 2010Q4 2006Q2 -60 2008Q3 -80 0.0%

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Office Occupancy Continues to Fall in 2021 Q1

Major and/or gateway cities experienced vacancy rates above the national rate (16.4%) such as Fairfield County (Connecticut), New York, Chicago, Washington DC, Dallas, Houston, Los Angeles, San Francisco, and Seattle.

On the other hand, smaller or tertiary cities such as Fort Myers, Cleveland, El Paso, Richmond, Boise, Colorado Springs, Tucson, Puget Sound, Savannah, and Sacramento had office vacancy rates of less than 10 percent.

Vacancy Rates as of 2021 Q1 Vacancy Rates as of 2021 Q1 Fairfield County 30.9% Houston 25.1% Fort Myers/Naples 5.9% New York - Brooklyn 22.7% Roanoke 6.2% Columbus 22.2% Binghamton Atlanta 22.1% 6.5% Dallas 22.0% Cleveland 6.7% Los Angeles CBD 21.6% El Paso 7.7% Minneapolis/St. Paul 21.5% Richmond 7.8% Phoenix 21.0% Boise 8.0% Chicago 20.5% Hampton Roads 8.5% Northern New Jersey 20.0% Colorado Springs 8.6% Milwaukee 20.0% Southern NH Suburban MD 20.0% 9.0% Cincinnati 19.9% Inland Empire 9.0% Hartford 19.6% Fredericksburg 9.1% Columbia 19.4% Tucson 9.3% Central New Jersey 19.1% Puget Sound - Eastside 9.9% San Francisco 18.7% Savannah 9.9% Northern VA 18.7% Greenville 10.3% Denver 18.7% Indianapolis 18.6% New Orleans 10.4% Los Angeles Non-CBD 18.5% Greensboro/Winston-… 10.9% Austin 18.2% Charleston 10.9% Jacksonville 18.1% Tulsa 11.3% Nashville 18.1% Providence 12.1% Washington 17.8% San Mateo County 12.2% Seattle 17.2% Long Island 12.2% Miami 17.1% New York - Midtown… 17.0% Reno 12.4% Birmingham 16.9% Sacramento 12.6% New York - Midtown 16.8% San Francisco North Bay 12.8% Salt Lake City 16.6% Orlando 13.0% Buffalo 16.4% Syracuse 13.0%

NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 8 3 | LEASING

Office Asking Rents Up 5% But are Providing Concessions

While office occupancy has fallen, asking rents were up 5% year-over-year. Asking rents have not declined but most landlords have been providing tenant concessions. Fifty-five percent of NAR commercial members who responded to the latest quarterly commercial survey reported that they are seeing more tenant concessions compared to the pre-pandemic period.

In the areas with high vacancy rates, asking rents have are still depressed, such as in San Francisco (-12%) and New York Midtown South (-9%). But in cities with low office vacancy rates, asking rents have sharply increased, such as In Fort Myers/Naples, Roanoke, Colorado Springs, El Paso, Sacramento, with asking rents at over 10%.

Year-over-year Percent Change in Year-over-year Percent Change in Office Office Rent Asking Rent

-12.0% San Francisco Fort Myers/Naples 23.4% -8.8% New York - Midtown South Roanoke 20.4% -4.6% Portland Colorado Springs 17.4% -3.9% Boston San Jose 15.0% El Paso 12.9% -3.6% Fort Worth Sacramento 11.8% -2.8% New York - Downtown Nashville 9.4% -2.8% New Haven Austin 8.4% Greenville 6.8% -2.3% Seattle Hampton Roads 6.8% -1.7% Binghamton Omaha 6.5% -1.7% Orange County Oakland/East Bay 6.0% -0.9% Northern VA Milwaukee 5.8% Los Angeles Non-CBD 5.7% -0.9% Dallas Fort Lauderdale 5.5% -0.9% Jacksonville Southern NH 5.3% -0.8% St. Petersburg/Clearwater Savannah 5.1% Syracuse 5.1% -0.7% Hartford Chicago 5.0% -0.6% Houston Minneapolis/St. Paul 4.9% -0.6% Tulsa Tucson 4.8% Charleston -0.4% New York - Midtown 4.8% Raleigh/Durham 4.4% -0.3% Long Island Atlanta 4.2% -0.2% Baltimore Charlotte 4.2% -0.1% Washington San Francisco North… 4.2% Puget Sound -… 4.0% -0.1% Salt Lake City

Sources: Cushman and Wakefield

NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 9 3 | LEASING

Industrial Occupancy Continues to Increase in 2021 Q1

During 2021 Q2 through 2021 Q1, Atlanta saw the largest increase in net absorption of industrial space, followed by the Inland Empire, Pennsylvania I-87/79 corridor, Chicago, and Dallas.

Industrial vacancy rate declined to 4.9 percent. The areas with the lowest vacancy rates include Providence, Orange County, Los Angeles, Philadelphia, and the New Jersey-Central area, Nashville, Boise, Reno, Tulsa, and Hampton Roads Virginia.

Industrial Vacancy Rate in 2021 Q1 Industrial Net Absorption 2020 Q2- 2021 Q1 in Million Square Feet Providence, RI 0.1% Orange County, CA 1.9% Atlanta, GA 29.0 Inland Empire CA 24.9 Los Angeles, CA 2.0% Pennsylvania I-81/I-78 23.0 Philadelphia, PA 2.2% Chicago, IL 19.5 Dallas/Ft. Worth, TX 18.8 New Jersey - Central 2.3% Phoenix, AZ 18.2 Nashville, TN 2.3% Houston, TX 16.4 Memphis, TN 10.5 Boise, ID 2.5% Indianapolis, IN 10.3 Reno, NV 2.8% New Jersey - Central 10.0 Kansas City, MO 9.3 Tulsa, OK 2.8% Columbus, OH 8.7 Hampton Roads, VA 2.8% Louisville, KY 7.6 Richmond, VA Savannah, GA 7.5 3.0% Milwaukee, WI 7.3 Inland Empire CA 3.0% Philadelphia, PA 6.1 Greensboro/Winston-… St. Louis, MO 5.2 3.1% Salt Lake City, UT 5.2 Omaha, NE 3.2% Baltimore, MD 4.8 Fort Myers/Naples FL 3.2% Cincinnati, OH 4.7 Orlando, FL 4.3 Portland, OR 3.3% Reno, NV 4.2 Savannah, GA 3.5% Los Angeles, CA 4.1 Las Vegas, NV 4.0 New Jersey - Northern 3.5% Boise, ID 3.8 Milwaukee, WI 3.6% Nashville, TN 3.7 San Antonio, TX 3.4 Long Island, NY 3.8% Denver, CO 3.4 Cleveland, OH 3.8% Jacksonville, FL 3.0 Minneapolis, MN 2.9 Lakeland, FL 2.6 Austin, TX 2.5 Charlotte, NC 2.1 Miami, FL 2.0 Sources: Cushman and Wakefield

NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 10 3 | LEASING

Trend Towards Smaller Square Footage, Companies leasing or moving into Shorter Term Leases, and More Suburban with smaller square Leases footage due to working from home 70% During the COVID-19 pandemic, working 69% from home became the norm. A majority of NAR commercial members who responded to the 2021 Q1 commercial survey―70% ― reported that companies are leasing or 62% moving into office with small square footage due to working from home.

More than half of respondents― 57% ― reported that they are seeing more short- 2020.Q3 2020.Q4 2021.Q1 term leases of less than 2 years compared to the case prior to the pandemic.

More than half of respondents ― 55% ― Percent of REALTOR®respondents who reported that more tenants are offering reported "More" short-term office leases rent concessions, compared to the case of 2 years or less prior to the pandemic. 63%

While less than a majority of respondents reported ― 47% ― reported having more sales or leasing transactions in the 59% suburban areas compared to the case prior to the pandemic, the rising share of 57% respondents indicates an increasing preference of investors for properties in the suburbs than in the central business districts. 2020.Q3 2020.Q4 2021.Q1

Percent of respondents who reported "More" sales or leasing transactions in suburban area vs. central business Percent of respondents who reported district compared to January 2020 "More" landlords offering tenant rent concessions compared to January 47% 2020 46%

65% 65% 55% 43%

2020.Q3 2020.Q4 2021.Q1

2020.Q3 2020.Q4 2021.Q1

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More Residential and Industrial Development YoY % Change in Construction Projects Commercial members of NAR who are (in sq.ft) in 2021 Q1 engaged in construction/development reported that on average, their construction activity (in square feet) was up 1% from one year ago. On average, respondents reported a 12% year-over-year increase in construction activity (in square footage) for industrial warehouses. Construction activity was also up by 6% for Class A apartments ad 2% higher for Class B/C. However, construction activity for 12%Industrial: Warehouse Apartment Class A Industrial: Flex Apartment Class B/C Retail: Free-standing Office Class A Retail: Strip Center Office Class B/C Hotel/hospitality Retail: Mall Senior housing retail malls, office, hotel, retail, and senior 6% 6% housing declined. 2% 1% 0%

Respondents of the 2021 Q1 survey reported 0% -3% that obtaining construction materials and -5% -9% getting permits were the main factors causing -11% construction delays, with half of respondents citing these causes. Hiring workers was cited by a third of respondents. Obtaining was cited by only less than 1 in 5 respondents, which indicates that obtaining financing is not a major issue for developers. Percent of NAR Commercial Member Respondents Who Reported These Delays were typically up to 3 months. No Causes of Delay in 2021 Q1 Survey respondents to the 2021 Q1 survey reported a delay of more than 6 months. Obtaining construction 50% materials

Construction Delays Reported by NAR Getting permits 50% Commercial Members Engaged in Development in 2021 Q1 Survey Hiring workers 32%

More than 6 months 0% Obtaining lender financing 18%

Up to 6 months 25% Other 18%

Up to 3 months 54%

No delay 21%

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Repurposing Vacant Malls

Vacant malls are being converted into other uses. In the 2021 Q1 survey, 39% of the reported responses were conversion of the vacant mall into a mixed –use project. The next most prevalent reuse was as a distribution center, a church, or a self-storage facility.

In 2020, NAR compiled a list of case studies on the conversion of vacant malls to other uses to provide a blueprint on how to finance the conversion and how state and local governments can support the conversion of vacant malls to other uses. Download the report here.

How are vacant malls being repurposed in your market? 2021 Q1 Survey

Mixed-use (residential , retail, office) 39% Industrial use: Distribution/fulfillment center 25% Church 21% Self-storage 20% Health care/hospital/medical 19% Office space 17% Multifamily/residential 12% Government (office, police precinct) 9% College/university office 8% Health armory 4% Sports stadium 2% Other 25%

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NAR Commercial Members Expect More Expected Change in Dollar Sales Sales Transactions in Land, Residential, and Volume in the Next 12 Months Among Industrial Properties NAR Commercial Members

5% Land Commercial members of NAR who 3% Industrial: Warehouse responded to the survey anticipate a modest 2% Industrial: Flex increase in sales of land (5%), industrial 1% Apartment Class B/C warehouses (3%), and Class B/C apartments 0% Senior housing -1% Apartment Class A (1%) in the next 12 months. Respondents -1% Office Class A anticipate a decline in sales transactions for -1% Retail: Free-standing retail, office, and hotel/hospitality properties. -1% Office Class B/C -1% Retail: Strip Center Pertaining to land sales, respondents -2% Hotel/Hospitality anticipate strong sales growth for residential -3% Retail: Mall land (8%), industrial land (7%), and recreational land (5%), as well as agricultural land (5%). Expected Change in Dollar Land Sales in the Next 12 Months Among NAR Respondents expect commercial prices to Commercial Members increase in the next 12 months across most property types, except for office, retail, and Residential 8% hotel properties. Industrial 7% Recreational 5% Agri, cultivable, irrig. 5% Ranch 4% For office/retail/hotel 3% Development-Greenfield 3% Timber 3% Agri, cultivable, non-irrig. 2% Development-Brownfield 1% Expected Change in Land Prices in the Other 5% Next 12 Months Among NAR Commercial Members

Residential 10% Industrial 7% Recreational 6% Expected Change in Commercial Prices Ranch 6% in the Next 12 Months Among NAR Agri, cultivable, irrig. 5% Commercial Members Timber 4% 6% Land Agri, cultivable, non-irrig. 3% 5% Industrial: Warehouse Development-Greenfield 3% 5% Industrial: Flex For office/retail/hotel 3% 5% Apartment Class B/C 4% Apartment Class A Development-Brownfield 2% 3% Senior housing 0% Retail: Free-standing -1% Office Class B/C -1% Retail: Strip Center -2% Office Class A -2% Hotel/Hospitality -5% Retail: Mall

NATIONAL ASSOCIATION of REALTORS® | RESEARCH GROUP | www.nar.realtor/research-and-statistics 14 COMMERCIAL REAL ESTATE TRENDS & OUTLOOK April 2021

NAR RESEARCH GROUP Lead Team

Research and Analysis

LAWRENCE YUN, PhD Chief Economist & Senior Vice President for Research

GAY CORORATON Senior Economist & Director of Housing and Commercial Research

BRANDON HARDIN Research Economist

MEREDITH DUNN Manager, Research

ANNA SCHNERRE Research Associate, Business Insights

This report is based on information collected from NAR’s 2021 Q1 Commercial Real Estate Quarterly Market Survey. The survey asks about the commercial transactions of REALTORS® and members of NAR’ commercial affiliate organizations (CCIM, SIOR, RLI, IREM, and the Counselors of Real Estate) during the fourth quarter of 2020. The survey was sent to approximately 76,000 commercial REALTORS® and members of affiliate organizations during April 1–22, 2021, of which 1,043 provided answers to at least one question. There were 346 respondents who reported a sales transaction, 153 respondents who reported a land sales transaction, 35 respondents who reported a leasing transaction, and 19 respondents who provided information on development transactions. Given the small sample size, the figures cited in this report should be treated with caution and should be interpreted as indicators of market trends rather than as accurate market statistics.

The NAR Research Group acknowledges the I/S/Cs for reaching out to their members to respond to the survey and developing the survey: Aubrie Kobernus, CEO, Realtors® Land Institute; Denise LeDuc-Froemming, CEO/EVP, IREM; Alexis Fermanis, Communications Director, SIOR; and Greg Fine, CEO/EVP, CCIM Institute. The Research Group also acknowledges Charlie Dawson, Vice-President, Engagement, and Rodney Gansho, Director of Engagement, in reaching out to CCIM, CRE, IREM, SIOR, and RLI designees to respond to the survey.

©2021 National Association of REALTORS® All Rights Reserved. May not be reprinted in whole or in part without permission of the National Association of REALTORS®. For question about this report or reprint information, contact [email protected].

Download report at: https://www.nar.realtor/commercial-real-estate-market-survey The National Association of REALTORS® is America’s largest trade association, representing more than 1.4 million members, including NAR’s institutes, societies and councils, involved in all aspects of the real estate industry. NAR membership includes brokers, salespeople, property managers, appraisers, counselors and others engaged in both residential and commercial real estate. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics. Working for America's property owners, the National Association provides a facility for professional development, research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system and the right to own .

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