A recent national survey from Black’s Guide, a comprehensive commercial real estate source, found that 89 percent of commercial real estate professionals feel confident that business will be as good as or better in the next six months as in the prior six months. This confidence follows a five-year slump in the commercial real estate industry.
Rather than focusing on where tenants will come from, commercial real estate professionals are focusing on the increased demands of new tenants, such as WiFi and food services, and the challenges of accelerating development, such as traffic issues and delays in construction permits, the survey shows.
Nearly 1,000 commercial real estate professionals nationwide participated in the survey. This respondent pool was drawn from the Black’s Guide online registered-user database, which consists of more than 18,000 commercial real estate professionals – largely brokers, property managers and developers – in 19 markets the company serves around the country.
“The results of our first CRE Trends Survey demonstrate that the commercial real estate industry is experiencing signs of consistent growth after a sluggish five years,” said Ed Barnes, vice president and general manager of Black’s Guide. “CRE professionals are back into problem-solving mode…looking for the kind of creative solutions and high-quality information that gets deals done.”
Other key themes on the current state of the CRE market that the survey cites include:
- On space requirements: 43 percent of respondents posited their average space requirement over the last six months as between 1,000-5,000 square feet.
- On term of a lease: The majority of respondents (55 percent) cited 3-5 years as the average term of a lease entered into in their market.
- On deal value: The majority of respondents (58 percent) noted their average leasing deal was worth up to $500,000 this year; 14 percent had average deals between $1 million and $5 million.
In all but three of the markets polled, “banking/finance” ranked as the leading industry to have leased commercial space over the past six months.
The Black’s Guide survey found that certain markets had a decidedly more optimistic industry outlook than others. Orlando is the most optimistic city of those surveyed: 51 percent of Orlando’s respondents anticipated their average current space requirement to ‘increase’ in the coming six months. Denver had the second most positive outlook with 50 percent anticipating an “increase”; in third place was Tampa, with 45 percent of respondents predicting an “increase.” The two Florida cities both also cited an increase in average space requirements over the past six months.
According to the Black’s Guide findings, WiFi was cited as the most popular amenity being requested by tenants today. Coming in at number two was food services; health clubs came in third. Some interesting amenities being asked for are: “24-7 air conditioning for computers” (South Florida); “sustainable/green practices within the facility” (New Jersey); and “high-end restaurants” (Dallas).
Lack of parking topped the list nationwide as the biggest challenge to leasing commercial space today, but naturally certain markets differed on this question, pointing to the unique challenges that influence or afflict individual markets:
- The San Francisco and Michigan markets cited “excess inventory” as their major obstacle; 67 percent and 75 percent, respectively.
- The Orlando and New Jersey markets noted “lack of inventory” as their biggest challenge; 41 percent, and 31 percent, respectively.
- The Jacksonville, Fla., and New York City markets specified “creating product differentiation,” 50 percent and 34 percent, respectively.
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