Commercial market shows signs of improvement in 2012

Commercial conditions were strong last year.

Property management companies experienced a heightened level of commercial real estate investment last year, and a significant amount of that volume was during the final three months of the year.

Overall investment jumped for the fourth year running in 2012, according to a report completed jointly between CCIM Institute and the National Association of Realtors. There was also a jump of approximately 18 percent for properties worth $2.5 million or less.

The final quarter of last year had a total investment volume level of $98 billion, which was the highest amount during the final quarter of a year since 2007, the CCIM Quarterly Market Trends report noted. There was approximately 55 percent more transactions during 2012 compared to one year earlier, surveyed industry members said. Prices improved or remained the same in 80 percent of all markets studied.

"The numbers speak clearly, particularly the figures besting recession-era data, demonstrating dependable progress that investors can act upon, and fundamentals are expected to steadily improve," said George Ratiu, manager of NAR's qualitative and commercial research. "With moderate gains in employment and consumer spending, absorption for office, industrial, and retail spaces will continue to grow, driving availability rates lower."

The most impressive market in the country in terms of investment volume was New York City, the report explained. The city had $30 billion invested in commercial real estate last year. Los Angeles and Chicago both had $19 billion, and finished tied for the second-highest level for a metro. Austin experienced the highest level of volume growth in 2012, as it rose more than 90 percent compared to 2011. Orange County, California, finished second, with a figure slightly higher than 80 percent, while San Jose was nearly 70 percent improved.

Fourth quarter has positive CRE growth
While the full-year showed multiple positive conditions for commercial property managers and other industry members, the fourth quarter had notably improved signs.

Overall mortgage debt outstanding during the fourth quarter rose by nearly $22 billion, which was close to 1 percent improved from the previous quarter's level, according to the Mortgage Bankers Association. The level of originations jumped by 49 percent from both the previous quarter and the same point in 2011. Vacancy rates during the final three months of the year also fell in the office, multifamily and retail sectors.

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