In another sign that the commercial real estate industry continues to rebound from the COVID-19 pandemic, the Society of Industrial and Office Realtors reported that nearly 90 percent of all commercial industrial real estate transactions happened on time in the fourth quarter of 2021.
Just 4 percent of these transaction types were cancelled, according to SIOR’s latest Snapshot Sentiment Report, which provides feedback from member brokers on the performance of CRE transactions during the fourth quarter of last year.
This is good news, showing that normalcy has largely returned to the commercial real estate business.
Of course, the office sector, which SIOR also monitors, didn’t see results that were quite as strong. According to SIOR’s report, 69 percent of office transactions happened on time during the fourth quarter of 2021, down from 75 percent in the third quarter of last year. This represents a continued downward trend since the office sector saw 77 percent of transactions close on time in the second quarter of 2021.
“Everyone is waiting for the next chapter in the pandemic story,” said SIOR chief executive officer Robert Thornburgh. “But what the report ultimately reveals is that the ongoing uncertainty isn’t slowing down the markets’ top brokers. These are the experts who are prepared for anything, who remain fluid and agile, and can respond quickly to what’s happening – instead of being married to one idea or plan.”
Members surveyed told SIOR that they are confident in the future strength of the office and industrial markets, with these members sharing an average confidence rating of 8.2 out of 10. This is an all-time high for the Snapshot Sentiment Report.
SIOR says that the boost in confidence is fueled by continued optimism among industrial brokers and rising confidence from office specialists.
On the state of the office market, SIOR’s global president Patrick Sentner said, “Most of the office growth has been with Class-A and -A+ buildings, which are receiving strong rent growth and longer terms in exchange for higher work-letters and more up-front rental abatement. Companies are looking to hire, and they know that quality office space offering amenities and location is one of the biggest factors in attracting high-level employees.”
Industrial brokers told SIOR that vacancies are “historically low” and the lack of inventory is fueling the country’s supply chain issues. To compound the challenge, delays in the construction industry are preventing new properties from coming online fast enough to overcome demand.