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National Association of REALTORS®
Research Group
Commercial Market
Insights
January 2021
www.nar.realtor/research-and-statistics
1
Contents
Economic Conditions
Overview
Apartment
Office
Industrial
Retail
Online Consumer
Packaged Goods Trends
The commercial real estate market is recovering,
but the recovery is facing a difficult challenge
amid social distancing and business opening
regulations to control the spread of COVID-19.
Commercial real estate sales transactions
picked up in the fourth quarter, but full –year
transactions were 32% below last year’s level.
The industrial market continues to be the
lifeblood of the commercial market, with
industrial occupancy increasing by 268 million
square feet, fueled by the sustained rise in e-
commerce sales. On the other hand, the office
sector shed 98 million of occupied office space,
The pandemic has negatively impacted 75% of
small businesses and increased by four-fold the
fraction of the workforce working from home, to
25% from just 6% prior to the pandemic.
The demand for apartment properties continues
to be weighed down by concerns about missed
rental payments, with 19% of renters not caught
up on rent. However, renters do make some
payment, with 94% of the December rent
collected.
A key question about the long-term effect of the
pandemic is on the role of the city versus the
suburb. The share of suburban office sales has
been on an uptrend since 2012, but pandemic
appears to be accelerating that trend.
Data on net absorption across metro areas also
show rising net occupancy gains in secondary
and tertiary cities while occupancy has declined
in the primary/gateway cities.
Retail stores are adapting to the pandemic’s
effect in a variety of ways, including through
offering online consumer packaged goods as
discussed in the special article.
Enjoy the latest issue!
Page
With the evolving impact of
the pandemic on
commercial real estate, we’d
like to hear from you about
what’s happening in your
market .
CRE Question of the Month:
How is the office
layout changing in
your market?
Send us your feedback
at data@nar,realtor
3
6
9
11
13
15
17
5
Economic Conditions
Source of data: Bureau of Labor Statistics, Establishment Survey
Economic conditions heavily impact
commercial transactions. We discuss
the major trends shaping the
commercial real estate market.
12.3 million payroll generated from
May-December 2020 with 9.8
million jobs to recover
Since February and through
December, the economy has
generated 12.3 million jobs, or 56% of
the 22 million jobs lost during March
and April. There are 9.8 million
nonfarm payroll jobs still to be
recovered.
In December, the economy had a net
job loss of 140,000 non-farm payroll
jobs due to 498,000 jobs lost in
leisure and industry that offset the
jobs gains in other industries.
152463
130303
142624
115000
120000
125000
130000
135000
140000
145000
150000
155000
Jan/2019
Mar/2019
May/2019
Jul/2019
Sep/2019
Nov/2019
Jan/2020
Mar/2020
May/2020
Jul/2020
Sep/2020
Nov/2020
In
thousands
12.3 Million Payroll Jobs Created During
May-December, With 9.8 Million Lost Jobs
to Recover
Source: BLS Establishment Survey
-969
-285
-397.2
-279
-569.7
-1363
-1083
-1370
-2296
-2781
-2384.4
-8318
-4.6
17
146.5
177
480.4
820
857
917
1438
1487
1973.7
4410
-10000 -6000 -2000 2000 6000
Government
Mining and Logging
Utilities
Information
Wholesale Trade
Financial Activities
Transportation and Warehousing
Manufacturing
Construction
Other Services
Professional and Business Services
Education and Health
Retail Trade
Leisure and Hospitality
Net Jobs Gained and Lost By Industry Since March as of
December 2020
Jobs Lost(-)/Gained(+) in May-Dec 2020 Jobs Lost(-) in March-April
With many food services
still operating at reduced
capacity and with
reduced personal and
business travel, the
largest jobs losses relative
to February 2020 levels
are in leisure and
hospitality (3.9 M),
government (1.3 M),
professional and business
services (0.86 M), health
care (0.84M ), and
manufacturing (0.54 M).
5
Economic Conditions
Source of data: US Census Bureau
24% of the workforce work from home
As of December 2020, 24% of the workforce are
working from home, a reversal from the
downtrend since September, perhaps as a
reaction to the increase in infection rates after
Thanksgiving.
Among computer and mathematical
occupations, two-thirds work from home.
E-Commerce sales accelerate to $867 billion,
or 16% of total retail sales
E-commerce sales continue to accelerate
during the pandemic. E-commerce and mail
order sales in the past 12 months ended
November 2020 ramped up to $867 billion,
with e-commerce sales accounting for 16% of
retail trade sales (excluding food services and
drinking places). Relative to the February level,
sales are up $150 billion.
The pandemic continues to adversely impact
retail sales of food services and beverage with
sales down by 20%.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Jan/2000
Mar/2001
May/2002
Jul/2003
Sep/2004
Nov/2005
Jan/2007
Mar/2008
May/2009
Jul/2010
Sep/2011
Nov/2012
Jan/2014
Mar/2015
May/2016
Jul/2017
Sep/2018
Nov/2019
12-Month Running Total of Electronic
and Mail Order Retail Sales (in billion
dollars)
$773.1
$618.8
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
Jan/2000
Mar/2001
May/2002
Jul/2003
Sep/2004
Nov/2005
Jan/2007
Mar/2008
May/2009
Jul/2010
Sep/2011
Nov/2012
Jan/2014
Mar/2015
May/2016
Jul/2017
Sep/2018
Nov/2019
12-Month Moving Total Food Services
and Drinking Places
35.4
31.3
26.4
24.3 22.7 21.2 21.8
23.7
20-May
3-Jun
17-Jun
1-Jul
15-Jul
29-Jul
12-Aug
26-Aug
9-Sep
23-Sep
7-Oct
21-Oct
4-Nov
18-Nov
Percent of Employed Who Teleworked
Source:BLS supplemental survey
68.8
58.1
55.2
48.9
47.6
45.6
44.0
42.4
36.9
25.0
       Computer and
mathematical occupations
       Legal occupations
       Business and financial
operations occupations
       Community and social
services occupations
       Architecture and
engineering occupations
       Education, training, and
library occupations
       Life, physical, and social
science occupations
       Arts, design, entertainment,
sports, and media occupations
       Management occupations
    Office and administrative
support occupations
Percent working from home as of
December 2020
5
Economic Conditions
19% of renters are not caught up on rent
Yes,
42,705,879,
81%
No,
10,136,084,
19%
US Population 18 Years and Older in Renter-
Occupied Housing Currently Caught Up on Rent
Payment as of Dec 9- 21 Survey
Nearly 1 in 5 renters ages 18 years old
and over are not caught up on rent,
based on the December 9-21
Household Pulse Survey of the US
Census Bureau.
However, renters do make some
payment. According to the National
Multifamily Housing Council, 93.7% of
the December rent was collected.
74% of small business have received a PPP loan
Small businesses continue to struggle, but a small fraction have closed, in part because of
the federal support. As of the January 9, 2020, the US Census Bureau‘s Business Pulse
Survey shows that:
75% of small business reported the pandemic has had a negative effect on business
74% have received a Paycheck Protection Plan loan
1.8% of businesses have permanently closed
7.1% will never return to normal level of operations
46.4% will take more than 6 months to resume normal operations
2
Commercial Market Overview
Commercial sales transactions picked up in
2020 Q4, but still below 2019 level
Acquisitions of properties or portfolio
acquisitions of $2.5 million or more continued to
recover in the fourth quarter, but with the steep
sales declines in the first half, full-year sales
transactions ($405.4 billion) was still 32% below
last year’s level ($597 billion).
On a full-year basis, acquisitions for hotels had
largest drop (-68%), followed by office (-40%),
then apartment buildings (-28%), and industrial
(-16%), Surprisingly, acquisitions for retail
properties nearly doubled.
Risk spreads (cap rate less 10-year T-bond) are
declining but remain elevated compared to
pre-pandemic levels
Investors’ perception of the level of risk in
commercial real estate investments is
improving, but the perceived level of risk is still
higher relative to pre-pandemic levels.
Investors of properties for $2.5 million or over
placed the lowest level of risk in the apartment
property market, with the risk spread (cap rates
less 10-year T-bond) at 4.2%, which is slightly
below the 4.5% spread in 2020 Q2, but still
higher than the 3.9% cap spread in 2020 Q1.
Industrial properties had the next lowest risk
spread, at 5.2%. Investors placed the highest
level of risk on acquisitions of hotel properties,
with a risk spread of 7.9%, about 1% higher
compared to one year ago.
Source: Real Capital Analytics
Source: Real Capital Analytics
$50.9
$75.0
$145.4
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
01Q1
02Q2
03Q3
04Q4
06Q1
07Q2
08Q3
09Q4
11Q1
12Q2
13Q3
14Q4
16Q1
17Q2
18Q3
19Q4
Billions
Quarterly Commercial Sales
Transactions of $2.5M or Over
Dollar sales volume ( in billions)
2019 2020
% sales
chg.
Total $597.3 $405.4 -32%
Apartment $191.6 $138.7 -28%
Office $144.0 $86.1 -40%
Industrial $16.5 $13.9 -16%
Retail $14.6 $29.1 98%
Hotel $38.7 $12.2 -68%
Source: Real Capital Analytics
4.2%
5.2%
5.70%
5.8%
7.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
01Q1
02Q2
03Q3
04Q4
06Q1
07Q2
08Q3
09Q4
11Q1
12Q2
13Q3
14Q4
16Q1
17Q2
18Q3
19Q4
Cap Rate Less 10-Year T-Bond
Apartment Industrial Retail
Office Hotel
3
Commercial Market Overview
REITS invested in Data Centers, Industrial, and
Timberland Have Highest Returns
The highest total returns are of REITS that invest
in data centers, self-storage, industrial, timber,
and infrastructure. The returns on these assets are
being driven by the growth of e-commerce sales,
the use of “big data” in every facet of life (Internet
of Things), and the demand for infrastructure,
particularly investments in broadband
infrastructure, with a higher fraction of the
workforce likely working from home even after
the pandemic ends as offices provide their
workers greater flexibility and savings in terms of
travel time and transportation.
Commercial prices still falling
The price of unleveraged commercial properties
held by REITS are slowly recovering, but prices of
a wide array of assets held by REITs are still down
by 8% as of December 2020 compared to prices
one year ago, based on the Green Street
Commercial Property Price Index―an appraisal-
based index that covers 15 property types
(apartment, office, industrial, retail, lodging, self-
storage, health care, data centers, etc.). The Green
Street Commercial Core Property Index which
tracks the core sectors and excludes lodging
(multifamily, office, industrial, retail) is also down
6% year-over-year.
CMBS delinquency rates continue to decline as
of December except for hotels
Overall delinquency rates on commercial
mortgage-backed Securities declined to 7.8% in
December (peak of 10.3% in June 2020). CMBS
backed by hotel assets had the highest
delinquency rate, at 19% (peak of 24% in June
2020) followed by retail, at 13% (peak of 18% in
June 2020). CMBS backed by industrial assets had
the lowest delinquency rate of 1.14%, then office,
at 2.18%, and multifamily, at 2.75%.
Source: Green Street
Source: Trepp
Source: Nareit
-8.1
-6.1
-15.0
-10.0
-5.0
0.0
5.0
Jan/2019
Mar/2019
May/2019
Jul/2019
Sep/2019
Nov/2019
Jan/2020
Mar/2020
May/2020
Jul/2020
Sep/2020
Nov/2020
YoY % Change in Commercial Property
Prices
GreenStreet All Property Index
GreenStreet Core Property Index
21.0
12.9 12.2 10.3
7.3
-9.9 -10.7
-18.4
-23.6 -25.2
Data
Centers
Self
Storage
Industrial
Timber
Infrastructure
Health
Care
Residential
Office
Lodging/Resorts
Retail
Year-to-date Total Returns in Equity
REITs
7.81
1.14
19.8
2.75
2.18
12.94
0
5
10
15
20
25
30
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
CMBS Marked as 30 Days + Delinquent
All Industrial Lodging
Multifamily Office Retail
3
Commercial Market Overview
Net loss of occupancy in office and retail is offset
by increase in industrial occupancy
The office sector lost 98 million square feet of office
space occupancy in 2020, but this was offset by 268
million in net occupancy in industrial buildings,
according to data from Cushman and Wakefield.
With the loss in office occupancy and with 25% of
the workforce still working from home, office
vacancy rates have increased to 15.5%, but this is
still below the 17% vacancy rate during the Great
Recession. Meanwhile, vacancy rates in industrial
properties has decreased to 5.2% from 5.4% in 2020
Q2. Apartment vacancy rates have ticked up to
6.4% from 5.7% in 2020 Q2.
Decline in office space construction in 2020 Q4,
except for industrial properties
The office space under construction declined
somewhat from 131.5 million square feet in 2020 Q1
to 123.8 million by 2020 Q4. On the other hand,
with the strong demand for industrial spaces
driven by e-commerce sales, 360.7 million square
feet of industrial space is underway, after
construction slumped a bit to 318.6 million in 2020
Q2.
Data from the U.S. Census Bureau as of November
shows a decline in the total dollar value of non-
residential construction done in November 2020.
Source: Cushman and Wakefield
35 36
77 82
50 45 33 48
(98)
197 186
266 268 284
249
218 241 268
2012 2013 2014 2015 2016 2017 2018 2019 2020
Net Absorption Of Industrial and Office
Space in Million Square Feet
Office Industrial
15.5%
5.2%
7.10%
6.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
2001
Q1
2002
Q2
2003
Q3
2004
Q4
2006
Q1
2007
Q2
2008
Q3
2009
Q4
2011
Q1
2012
Q2
2013
Q3
2014
Q4
2016
Q1
2017
Q2
2018
Q3
2019
Q4
Vacancy Rates
Office Industrial Retail Multifamily
123.8
360.7
-
50
100
150
200
250
300
350
400
1995
Q1
1996
Q4
1998
Q3
2000
Q2
2002
Q1
2003
Q4
2005
Q3
2007
Q2
2009
Q1
2010
Q4
2012
Q3
2014
Q2
2016
Q1
2017
Q4
2019
Q3
Millions
Under Construction (Sq. Ft)
Office Industrial
15.8
-26.5
-6.6
-1.8
-26.4
-30.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Jan/2019
Mar/2019
May/2019
Jul/2019
Sep/2019
Nov/2019
Jan/2020
Mar/2020
May/2020
Jul/2020
Sep/2020
Nov/2020
Year-over-Change in the Value of
Construction Spending Put in Place as
of November 2020
Multifamily
Lodging
Office
Commercial
Amusement and recreation
Source: US Census Bureau
5
Sales/acquisitions for apartments end 8%
below 2019 level
Acquisitions of apartment properties or
portfolios of $2.5 million or over continued to
recover in 2020 Q4, but the annual sales volume
for 2020 of $139 billion was still 8% below the
2019 level, according to Real Capital Analytics.
Concerns about ability of renters to pay rent and
working from home are the likely factors
dampening investor interest. According to the
US Census Bureau’s Household Pulse Survey
December survey, 19% of renters are not caught
up on rent and 24% of workers are still working
from home compared to only 6% prior to the
pandemic.
Decline in sales share and prices in the six
major markets
The six major markets (New York, Boston,
Chicago, Washington DC, Los Angeles, and San
Francisco) accounted for 13% of apartment sales
deals. The share of the six major markets has
been trending downwards since 2013 when
sales accounted for about 30%. The average
price per unit in the six major markets has
decreased during the pandemic, from
$320,000/ unit to $298,000.unit. Meanwhile, the
average price in the non-major markets
increased from $136,000/unit to $169,000.
In 2020, the most active apartment markets in
terms of dollar volume were Dallas ($10.3 B),
Atlanta ($7.9 B), Phoenix ($6.4 B), Los Angeles
($5.5 B), and Denver ($ 4.9 B).
Apartment
Demand continues to shift to secondary markets
13.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
02Q1
03Q1
04Q1
05Q1
06Q1
07Q1
08Q1
09Q1
10Q1
11Q1
12Q1
13Q1
14Q1
15Q1
16Q1
17Q1
18Q1
19Q1
20Q1
Share of Six Major Markets to Total
Acquisitions/Investments of Multifamily
Building Units
$297,786
$168,649
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
01Q1
02Q2
03Q3
04Q4
06Q1
07Q2
08Q3
09Q4
11Q1
12Q2
13Q3
14Q4
16Q1
17Q2
18Q3
19Q4
Average Price/Unit
Six Major Markets (6MM)
Non Major Markets (NMM)
$10.3
$7.9
$6.4
$5.5
$4.9
$3.8
$3.7
$3.6
$3.2
$3.2
$3.1
$2.8
$2.7
$2.6
$2.5
$2.4
$2.4
$1.9
$1.9
$1.8
Dallas
Atlanta
Phoenix
Los
Angeles
Denver
Austin
DC
VA
burbs
Charlotte
Manhattan
Seattle
Houston
Tampa
Boston
NYC
Boroughs
Raleigh/Durham
Orlando
DC
MD
burbs
No
NJ
San
Diego
San
Antonio
Dollar Volume of Apartment
Transactions Closed in 2020 ( Billion $) )
Source of data: Real Capital Analytics
$37.4
$19.3
$0.0
$10.0
$20.0
$30.0
$40.0
01Q1
02Q3
04Q1
05Q3
07Q1
08Q3
10Q1
11Q3
13Q1
14Q3
16Q1
17Q3
19Q1
20Q3
Billions
Sales Transactions of $2.5M or Over
In Billion Dollars
Low-rise (< 4 fl) Mid/Highrise
5
Apartment Sales Decrease by Metro Areas
Apartment transactions fell in almost all of the 53 apartment markets tracked by Real Capital
Analytics. Many of the primary and bigger metro areas saw a decline in sales, led by Las Vegas,
Washington DC, Seattle, San Francisco, and Houston, with sale down by 40% to 80%.
Sales transactions were higher in 2020 compared to 2019 only in Indianapolis, Sacramento,
Jacksonville, Palm Beach County, Salt Lake City, Kansas City, Hartford, and St. Louis.
Apartment
Demand continues to shift to secondary markets
-43%
-43%
-43%
-44%
-46%
-49%
-55%
-56%
-57%
-58%
-62%
-67%
-75%
Baltimore
Inland Empire
Westchester
Los Angeles
Pittsburgh
Cleveland
Philadelphia
Chicago
Houston
San Francisco
Seattle
DC
Las Vegas
Metro Markets With the Largest Decline
in Dollar Volume of Apartment
Transactions in 2020 vs. 2019
Rental vacancy rate rises and rent growth slows
With workers working from home, the U.S. rental vacancy rate rose from 5.7% in 2020 Q2 to 6.4% in
2020 Q3. The pace of rent growth also slowed from 3.7% in 2020 Q1 to 2.5% in 2020 Q4.
According to ApartmentList.com, rents for 2-bedroom apartments declined were down in 20% of
the 195 metro areas it tracks, including in the largest metro areas of San Jose (-15%), San Francisco
(-15%), Boston (-13%), Seattle (-11%), Washington DC (-8%), New York (-8%), and Chicago (-6%).
4%
6%
8%
10%
13%
22%
23%
72%
St Louis
Hartford
Kansas City
Salt Lake City
Palm Beach Co
Jacksonville
Sacramento
Indianapolis
Metro Markets With Higher Dollar
Volume of Apartment Transactions in
2020 vs. 2019
7
The dollar sales volume of office property
acquisitions continued to recover in 2020 Q4, but
the full-year sales transaction volume of $86 billion
was still 40% below last year’s level.
Sales transactions of offices in the central business
district (CBD) fell more (-48%) compared to sales of
offices in the suburbs (-35%), an acceleration of the
trend since 2013 towards suburban offices.
Sales in the major metro areas (New York, Boston,
Chicago, Washington DC, Los Angeles, San
Francisco) were down by 38%, with the share of
office units in the six major markets falling to 32%,
from 40% in 2020 Q1.
Of the 52 office markets tracked by Real Capital
Analytics, only six metros had more sales
transactions in 2020 compared to 2019: Raleigh-
Durham, Indianapolis, Detroit, Cincinnati,
Pittsburgh, and Northern New Jersey.
Office
Secondary/tertiary markets gain market share
Source of data: Real Capital Analytic
$9.8
$17.8
$-
$10
$20
$30
$40
$50
01Q1
02Q2
03Q3
04Q4
06Q1
07Q2
08Q3
09Q4
11Q1
12Q2
13Q3
14Q4
16Q1
17Q2
18Q3
19Q4
Billions
Sales Transactions of $2.5M or Over
In Billon Dollars
Office - CBD Office - Sub
76%
40%
50%
60%
70%
80%
90%
100%
02Q1
03Q2
04Q3
05Q4
07Q1
08Q2
09Q3
10Q4
12Q1
13Q2
14Q3
15Q4
17Q1
18Q2
19Q3
20Q4
Share of Suburban Office Units to Total
Sales
$269
$492
$1
$101
$201
$301
$401
$501
$601
01Q1
02Q2
03Q3
04Q4
06Q1
07Q2
08Q3
09Q4
11Q1
12Q2
13Q3
14Q4
16Q1
17Q2
18Q3
19Q4
Average Price Per Square Foot
Suburbs CBD
32%
0%
20%
40%
60%
80%
02Q1
03Q1
04Q1
05Q1
06Q1
07Q1
08Q1
09Q1
10Q1
11Q1
12Q1
13Q1
14Q1
15Q1
16Q1
17Q1
18Q1
19Q1
20Q1
Share of Office Units in the Six Major
Markets to Total Sales
88%
37%
15%
8% 8% 4%
Metro Markets With Higher Dollar
Volume of Office Transactions in 2020 vs.
2019
8
Loss of 98 million square feet of office occupancy in 2020
With about a quarter of the workforce working from home, office occupancy fell by 98 million
square feet in 2020. (Note: a football field is about 57,000 sq, feet, so 98 msf is approximately 1,720
football fields or 33 football fields per state!).
The largest loss of office occupancy were in San Francisco and New York, each with 9 million loss
of office occupancy, followed by Boston (7.5 MSF) and Dallas ( 5 MSF).
Most metro areas that saw an increase in office occupancy were secondary or tertiary areas,
except New York Brooklyn. These are Raleigh-Durham, Hampton Roads, Boise, Milwaukee, Fort
Myers, Northern Virginia, Colorado Springs, Brooklyn, and Syracuse.
Office
Secondary/tertiary markets gain market share
Source of data: Real Capital Analytic
-2.0
-2.2
-2.3
-2.3
-2.4
-2.4
-2.4
-2.7
-3.2
-3.8
-4.0
-4.2
-4.4
-5.0
-7.5
-9.0
-9.1
New York - Downtown
Seattle
Orange County
San Diego
New Jersey - Central
Austin
Chicago
San Jose
Denver
Oakland/East Bay
Los Angeles Non-CBD
New York - Midtown South
Houston
Dallas
Boston
New York - Midtown
San Francisco
Metro Areas with the Largest Loss of
Office Occupancy (million sq.ft.) in 2020
27,984
169,537
176,285
296,335
352,581
388,496
596,535
631,136
844,190
Syracuse
New York - Brooklyn
Colorado Springs
Northern VA
Fort Myers/Naples
Milwaukee
Boise, ID
Hampton Roads
Raleigh/Durham
Metro Areas with an Increase in Office
Occupancy (million sq.ft.) in 2020
9
Industrial
Industrial Q4 2020 sales exceed Q1 2020 levels, but
down 2% y/y
Investor acquisitions of industrial properties or
portfolio acquisitions of $2.5 million or over for the
entire 2020 year, decreased 16% year-over-year as
transaction volume for both flex and warehouse
properties totaled $98.8 billion. Sales for 2019
totaled $117.4 billion. While the industrial total was
down year-over-year, Q4 2020 volume exceeded Q1
2020 levels. The Q4 2020 volume was $36.1b in
comparison to Q1 2020 $33.3b as investors
continue to favor industrial properties as a result of
the acceleration of e-commerce. With the
acceleration of e-commerce, warehouse property
growth continues to increase at record levels.
The average price per square foot of industrial
acquisitions in Q4 increased by $6 from Q1. The
average price per square foot for flex properties fell
to $138/sq. ft., down from $164/sq. ft. recorded in
Q3. Warehouse average price per square foot
increased $8 from the Q3 level towards $99 in Q4,
which indicates price growth for warehouse
properties.
Warehouse acquisitions continue to account for
majority of industrial transactions, as it increased
its share of total industrial volume to 83%, up from
74% in Q3.
Year-to-date as of December 2020, the most active
markets with respect to industrial property
acquisitions were Los Angeles (469), Chicago (432),
Dallas (303) and Atlanta (235).
$6
$30
$-
$5
$10
$15
$20
$25
$30
$35
$40
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
Billions
$
Source: NAR analysis of RCA Data
QTR Industrial Sales Transactions of $2.5M
or Over as of December 2020 (in Billions $)
Flex Warehouse
$138
$99
$105
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
'01'02'03'04'05'06'07'08'09'10'11'12'13'14'15'16'17'18'19'20
Source: NAR analysis of RCA Data
QTR Average Sales Price Per Square Foot
for Industrial Properties
Flex Warehouse All Industrial
469
432
303
235
201197181178164160160
133121117112111107
0
50
100
150
200
250
300
350
400
450
500
Most Active Industrial Markets by Number of
Property Acquisitions in Jan-Dec 2020
10
Industrial
Industrial records set
Rental vacancy rate remains unchanged from
the prior quarter
The U.S. rental vacancy rate increased from 4.9%
in 2020 Q1 to 5.1% in 2020 Q2. Q3 2020 saw 5.2%
and Q4 2020 5.2% as well as rental vacancy rates
remains unchanged. The lowest vacancy rates in
U.S. were in the following markets : Orange
County (2.0%), Nashville (2.1%), New Jersey-Central
(2.2%) and Los Angeles (2.4%).
Net absorption sets quarter record
U.S. net absorption set a quarter record in Q4
2020 with 89.8 million square feet. New leasing
activity in Q4 2020 saw 178.8 msf, another quarter
record. Across 2020 the four quarters totaled a
new record of 659.1 msf.
New record set for industrial asking rents
U.S. industrial asking rents were solid across the
2020 year, as they increased every quarter from
$6.46 in Q1 to $6.58 in Q2. Q3 rents were $6.63
and Q4 rents were $6.76 for which, Q4 2020
asking rents represent a new record high rent
level. The west saw the highest asking rents with
$9.62 for Q4 2020.
5.2%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2001Q2
2002Q3
2003Q4
2005Q1
2006Q2
2007Q3
2008Q4
2010Q1
2011Q2
2012Q3
2013Q4
2015Q1
2016Q2
2017Q3
2018Q4
2020Q1
QTR Industrial Vacancy Rate
89,814,535
-40,000,000
-20,000,000
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
2010
Q1
2010
Q4
2011
Q3
2012
Q2
2013
Q1
2013
Q4
2014
Q3
2015
Q2
2016
Q1
2016
Q4
2017
Q3
2018
Q2
2019
Q1
2019
Q4
2020
Q3
QTR Industrial Net Absorption
$6.76
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
2010
Q1
2010
Q4
2011
Q3
2012
Q2
2013
Q1
2013
Q4
2014
Q3
2015
Q2
2016
Q1
2016
Q4
2017
Q3
2018
Q2
2019
Q1
2019
Q4
2020
Q3
QTR Industrial Rents
178,808,80
2
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
180,000,000
200,000,000
2010
Q1
2010
Q4
2011
Q3
2012
Q2
2013
Q1
2013
Q4
2014
Q3
2015
Q2
2016
Q1
2016
Q4
2017
Q3
2018
Q2
2019
Q1
2019
Q4
2020
Q3
QTR Industrial Leasing
11
Retail
Q4 2020 acquisitions of retail properties near Q1 2020
levels
Commercial sales/acquisitions of retail
properties or portfolio acquisitions of $2.5
million or more recorded $37.7 billion
throughout 2020. This represents a year-over-
year decrease of 43% as retail was heavily
affected by the coronavirus pandemic. On a
quarterly basis, retail volume was $11.9b in Q4
2020, which represents a decreases of 42%
year-over-year with respect to the same period.
But against the prior quarter, Q3, the Q4 figure
represents a 64% increase.
With decreasing property prices for the
majority of 2020, the average price per square
foot for all of retail was $191/sq. ft. in Q4 where
shops averaged $294/sq. ft. and centers
averaged $127/sq. ft.
Sales of shopping centers accounted for 51% of
all retail transactions in 2020. In Q4 2020
centers saw its share increase by accounting
for more than 55% of all retail transactions.
Year-to-date as of December 2020, the most
active markets with respect to retail property
acquisitions were Los Angeles (228), Chicago
(155), Dallas (155) and New York City Boroughs
(138).
$5
$7
$-
$5
$10
$15
$20
$25
$30
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
Billions
$
Source: NAR analysis of RCA Data
QTR Retail Sales Transactions of $2.5M or
Over as of December 2020 (in Billions $)
Shops Centers
$294
$127
$191
$-
$100
$200
$300
$400
$500
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
Source: NAR analysis of RCA Data
QTR Average Sales Price Per Square Foot
for Retail Properties
Shops Centers All Retail
228
155155
138
122115102
76 74 69 65 64 62 62 62 61 57
0
50
100
150
200
250
Source: NAR analysis of RCA Data
Most Active Retail Markets by Number of
Property Acquisitions in Jan-Dec 2020
12
Retail
Sales transactions volume continue recovery in Q4
2020
The dollar sales volume of retail property
acquisitions in the six major markets (6MM
which are New York, Boston, Chicago,
Washington DC, Los Angeles, and San
Francisco) continued to recover in 2020 Q4, but
the full-year sales transaction volume of $21
billion was still 38% below last year’s level and
down on a quarter year-over-year basis of 32%.
Dollar sales volume for the non major markets
(NMM) was highest in Q4 2020 as transaction
volume was $8.1 billion. Annually, NMM sales
transaction volume totaled $24.7 billion and
was down 45% year-over-year.
6MM Q4 2020 retail sales transactions of
centers accounted for 50% of transactions
where as NMM, centers account for more than
57% of retail sales transactions.
Q4 average sales price per square foot of retail
space in the 6mm fell (-8%) compared to price
per square foot of retail in the NMM which
grew (2%).
Q4 average cap rates for both 6mm and NMM
remain flat from the prior quarter, 6.0% and
6.8% respectively.
$4
$8
$-
$5
$10
$15
$20
$25
$30
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
Billions
6MM vs NMM QTR Retail Sales
Transactions of $2.5M or Over as of
December 2020 (in Billion $)
6MM NMM
$335
$155
$-
$100
$200
$300
$400
$500 '01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
6MM vs NMM QTR Average Sales Price
Per Square Foot for All Retail Properties
6MM NMM
6.0%
6.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
6MM vs NMM QTR Average Cap Rates
for All Retail Properties
6MM NMM
290
917
0
500
1,000
1,500
2,000
2,500
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
'20
6MM vs NMM QTR Number of
Properties
6MM NMM
13
Sustained Growth in Online CPG
Sales
The acceleration of e-commerce last
year, on-the-whole, has been well
documented, but let us dive a little
deeper into the online sales trends of the
U.S. CPG industry (consumer packaged
goods). While the e-commerce portion
of the U.S. CPG industry, comprised of
food & beverage, general merchandise,
homecare and health & beauty, remains
a small portion of total CPG sales today,
it remains at an elevated level.
According to IRI data, online CPG growth
is quite strong. Online CPG sales
continued its year-over-year expansion,
increasing 64% for the four weeks
ending December 27, 2020. This
represents a 1% increasing difference
from the 63% y/y recorded in the prior
period. The increase in online CPG sales
was underpinned by consumers shift
towards online shopping as consumers
continued to shop online throughout the
holiday season given increasing COVID
cases and the return of lockdowns in
some states.
The chart below illustrates the online
sales growth by CPG department type.
Total U.S. CPG e-commerce growth was
driven by growth in the Total Edible
department. Total Edible CPG e-
commerce sales grew 79% year-over-
year for the four weeks ending on
December 27, 2020 which is a slight
decrease from the prior periods 84%
year-over-year growth rate.
Total Edible (food & beverage), continues
to see elevated levels and the most
significant increases with respect to the
other categories as it is supported by
consumers continuing to stay in and
prepare meals at home.
64%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
*Note: Each date represents rolling 4 weeks
Source: NAR analysis of IRI E-Market Insights data
Total CPG E-Commerce Sales Y/Y Percent
Change
64%
79%
57%
0%
20%
40%
60%
80%
100%
120%
140%
*Note: Each date represents rolling 4 weeks
Source: NAR analysis of IRI E-Market Insights data
Total CPG E-Commerce Sales, by Department
Type (Y/Y Percent Change)
Total CPG E-Com Total Edible E-Com
Total Non-Edible E-Com
14
Sustained Growth in Online
CPG Sales
Within Total Edible, Refrigerated Foods
continue to outpace the other food
categories in CPG online sales.
Refrigerated Food growth, led with 95%
year-over-year growth in online food sales
in the four weeks ended December 27,
2020. Refrigerated Food growth also
outpaces growth for Total Non-Edible
categories as well with Total Non-Edible
department, Home Care, closely following
with 91% year-over-year growth.
So, what does all of this mean? The effects
of the coronavirus pandemic have
reinforced the position of CPG e-
commerce with accelerated online
shopping trends and changes in
consumer spending habits fueling the
online channel’s December period
increase as growth remains at higher
levels than pre-COVID levels. Provided the
current state of increasing COVID cases
and with some vaccine distribution
currently underway, current consumer
meal preparation, staying at home and
online shopping trends may maintain
CPG e-commerce growth levels moving
forward. As consumers spend more time
in the current pandemic-induced
environment, online spending behavior
and e-commerce are likely to become
ingrained into consumers spending
habits post-pandemic.
81%
95%
67%
76%
40%
67%
91%
65%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
12.27.20
Source: NAR analysis of IRI E-Market Insights data
CPG E-Commerce Sales, by Category, Four
Weeks Ended December 27, 2020 (Y/Y
Percent Change)
General Food Refrigerated
Beverages Frozen
Beauty Health
Home Care General Merchandise
©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
data@realtors.org.
Download report at: https://www.nar.realtor/research-and-statistics/research-reports/commercial-research
COMMERCIAL MONTHLY INSIGHTS REPORT
January 2021
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
Research Manager
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 real
property.
NATIONAL ASSOCIATION OF REALTORS®
RESEARCH GROUP
The Mission of the NATIONAL ASSOCIATION OF REALTORS® Research Group is to
produce timely, data-driven market analysis and authoritative business intelligence
to serve members, and inform consumers, policymakers and the media in a
professional and accessible manner.
To find out about other products from NAR’s Research Group, visit
www.nar.realtor/research-and-statistics
500 New Jersey Avenue, NW
Washington, DC 20001
202.383.1000

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Commercial Real Estate Market Insights

  • 1. National Association of REALTORS® Research Group Commercial Market Insights January 2021
  • 2. www.nar.realtor/research-and-statistics 1 Contents Economic Conditions Overview Apartment Office Industrial Retail Online Consumer Packaged Goods Trends The commercial real estate market is recovering, but the recovery is facing a difficult challenge amid social distancing and business opening regulations to control the spread of COVID-19. Commercial real estate sales transactions picked up in the fourth quarter, but full –year transactions were 32% below last year’s level. The industrial market continues to be the lifeblood of the commercial market, with industrial occupancy increasing by 268 million square feet, fueled by the sustained rise in e- commerce sales. On the other hand, the office sector shed 98 million of occupied office space, The pandemic has negatively impacted 75% of small businesses and increased by four-fold the fraction of the workforce working from home, to 25% from just 6% prior to the pandemic. The demand for apartment properties continues to be weighed down by concerns about missed rental payments, with 19% of renters not caught up on rent. However, renters do make some payment, with 94% of the December rent collected. A key question about the long-term effect of the pandemic is on the role of the city versus the suburb. The share of suburban office sales has been on an uptrend since 2012, but pandemic appears to be accelerating that trend. Data on net absorption across metro areas also show rising net occupancy gains in secondary and tertiary cities while occupancy has declined in the primary/gateway cities. Retail stores are adapting to the pandemic’s effect in a variety of ways, including through offering online consumer packaged goods as discussed in the special article. Enjoy the latest issue! Page With the evolving impact of the pandemic on commercial real estate, we’d like to hear from you about what’s happening in your market . CRE Question of the Month: How is the office layout changing in your market? Send us your feedback at data@nar,realtor 3 6 9 11 13 15 17
  • 3. 5 Economic Conditions Source of data: Bureau of Labor Statistics, Establishment Survey Economic conditions heavily impact commercial transactions. We discuss the major trends shaping the commercial real estate market. 12.3 million payroll generated from May-December 2020 with 9.8 million jobs to recover Since February and through December, the economy has generated 12.3 million jobs, or 56% of the 22 million jobs lost during March and April. There are 9.8 million nonfarm payroll jobs still to be recovered. In December, the economy had a net job loss of 140,000 non-farm payroll jobs due to 498,000 jobs lost in leisure and industry that offset the jobs gains in other industries. 152463 130303 142624 115000 120000 125000 130000 135000 140000 145000 150000 155000 Jan/2019 Mar/2019 May/2019 Jul/2019 Sep/2019 Nov/2019 Jan/2020 Mar/2020 May/2020 Jul/2020 Sep/2020 Nov/2020 In thousands 12.3 Million Payroll Jobs Created During May-December, With 9.8 Million Lost Jobs to Recover Source: BLS Establishment Survey -969 -285 -397.2 -279 -569.7 -1363 -1083 -1370 -2296 -2781 -2384.4 -8318 -4.6 17 146.5 177 480.4 820 857 917 1438 1487 1973.7 4410 -10000 -6000 -2000 2000 6000 Government Mining and Logging Utilities Information Wholesale Trade Financial Activities Transportation and Warehousing Manufacturing Construction Other Services Professional and Business Services Education and Health Retail Trade Leisure and Hospitality Net Jobs Gained and Lost By Industry Since March as of December 2020 Jobs Lost(-)/Gained(+) in May-Dec 2020 Jobs Lost(-) in March-April With many food services still operating at reduced capacity and with reduced personal and business travel, the largest jobs losses relative to February 2020 levels are in leisure and hospitality (3.9 M), government (1.3 M), professional and business services (0.86 M), health care (0.84M ), and manufacturing (0.54 M).
  • 4. 5 Economic Conditions Source of data: US Census Bureau 24% of the workforce work from home As of December 2020, 24% of the workforce are working from home, a reversal from the downtrend since September, perhaps as a reaction to the increase in infection rates after Thanksgiving. Among computer and mathematical occupations, two-thirds work from home. E-Commerce sales accelerate to $867 billion, or 16% of total retail sales E-commerce sales continue to accelerate during the pandemic. E-commerce and mail order sales in the past 12 months ended November 2020 ramped up to $867 billion, with e-commerce sales accounting for 16% of retail trade sales (excluding food services and drinking places). Relative to the February level, sales are up $150 billion. The pandemic continues to adversely impact retail sales of food services and beverage with sales down by 20%. 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Jan/2000 Mar/2001 May/2002 Jul/2003 Sep/2004 Nov/2005 Jan/2007 Mar/2008 May/2009 Jul/2010 Sep/2011 Nov/2012 Jan/2014 Mar/2015 May/2016 Jul/2017 Sep/2018 Nov/2019 12-Month Running Total of Electronic and Mail Order Retail Sales (in billion dollars) $773.1 $618.8 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 Jan/2000 Mar/2001 May/2002 Jul/2003 Sep/2004 Nov/2005 Jan/2007 Mar/2008 May/2009 Jul/2010 Sep/2011 Nov/2012 Jan/2014 Mar/2015 May/2016 Jul/2017 Sep/2018 Nov/2019 12-Month Moving Total Food Services and Drinking Places 35.4 31.3 26.4 24.3 22.7 21.2 21.8 23.7 20-May 3-Jun 17-Jun 1-Jul 15-Jul 29-Jul 12-Aug 26-Aug 9-Sep 23-Sep 7-Oct 21-Oct 4-Nov 18-Nov Percent of Employed Who Teleworked Source:BLS supplemental survey 68.8 58.1 55.2 48.9 47.6 45.6 44.0 42.4 36.9 25.0        Computer and mathematical occupations        Legal occupations        Business and financial operations occupations        Community and social services occupations        Architecture and engineering occupations        Education, training, and library occupations        Life, physical, and social science occupations        Arts, design, entertainment, sports, and media occupations        Management occupations     Office and administrative support occupations Percent working from home as of December 2020
  • 5. 5 Economic Conditions 19% of renters are not caught up on rent Yes, 42,705,879, 81% No, 10,136,084, 19% US Population 18 Years and Older in Renter- Occupied Housing Currently Caught Up on Rent Payment as of Dec 9- 21 Survey Nearly 1 in 5 renters ages 18 years old and over are not caught up on rent, based on the December 9-21 Household Pulse Survey of the US Census Bureau. However, renters do make some payment. According to the National Multifamily Housing Council, 93.7% of the December rent was collected. 74% of small business have received a PPP loan Small businesses continue to struggle, but a small fraction have closed, in part because of the federal support. As of the January 9, 2020, the US Census Bureau‘s Business Pulse Survey shows that: 75% of small business reported the pandemic has had a negative effect on business 74% have received a Paycheck Protection Plan loan 1.8% of businesses have permanently closed 7.1% will never return to normal level of operations 46.4% will take more than 6 months to resume normal operations
  • 6. 2 Commercial Market Overview Commercial sales transactions picked up in 2020 Q4, but still below 2019 level Acquisitions of properties or portfolio acquisitions of $2.5 million or more continued to recover in the fourth quarter, but with the steep sales declines in the first half, full-year sales transactions ($405.4 billion) was still 32% below last year’s level ($597 billion). On a full-year basis, acquisitions for hotels had largest drop (-68%), followed by office (-40%), then apartment buildings (-28%), and industrial (-16%), Surprisingly, acquisitions for retail properties nearly doubled. Risk spreads (cap rate less 10-year T-bond) are declining but remain elevated compared to pre-pandemic levels Investors’ perception of the level of risk in commercial real estate investments is improving, but the perceived level of risk is still higher relative to pre-pandemic levels. Investors of properties for $2.5 million or over placed the lowest level of risk in the apartment property market, with the risk spread (cap rates less 10-year T-bond) at 4.2%, which is slightly below the 4.5% spread in 2020 Q2, but still higher than the 3.9% cap spread in 2020 Q1. Industrial properties had the next lowest risk spread, at 5.2%. Investors placed the highest level of risk on acquisitions of hotel properties, with a risk spread of 7.9%, about 1% higher compared to one year ago. Source: Real Capital Analytics Source: Real Capital Analytics $50.9 $75.0 $145.4 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 01Q1 02Q2 03Q3 04Q4 06Q1 07Q2 08Q3 09Q4 11Q1 12Q2 13Q3 14Q4 16Q1 17Q2 18Q3 19Q4 Billions Quarterly Commercial Sales Transactions of $2.5M or Over Dollar sales volume ( in billions) 2019 2020 % sales chg. Total $597.3 $405.4 -32% Apartment $191.6 $138.7 -28% Office $144.0 $86.1 -40% Industrial $16.5 $13.9 -16% Retail $14.6 $29.1 98% Hotel $38.7 $12.2 -68% Source: Real Capital Analytics 4.2% 5.2% 5.70% 5.8% 7.9% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 01Q1 02Q2 03Q3 04Q4 06Q1 07Q2 08Q3 09Q4 11Q1 12Q2 13Q3 14Q4 16Q1 17Q2 18Q3 19Q4 Cap Rate Less 10-Year T-Bond Apartment Industrial Retail Office Hotel
  • 7. 3 Commercial Market Overview REITS invested in Data Centers, Industrial, and Timberland Have Highest Returns The highest total returns are of REITS that invest in data centers, self-storage, industrial, timber, and infrastructure. The returns on these assets are being driven by the growth of e-commerce sales, the use of “big data” in every facet of life (Internet of Things), and the demand for infrastructure, particularly investments in broadband infrastructure, with a higher fraction of the workforce likely working from home even after the pandemic ends as offices provide their workers greater flexibility and savings in terms of travel time and transportation. Commercial prices still falling The price of unleveraged commercial properties held by REITS are slowly recovering, but prices of a wide array of assets held by REITs are still down by 8% as of December 2020 compared to prices one year ago, based on the Green Street Commercial Property Price Index―an appraisal- based index that covers 15 property types (apartment, office, industrial, retail, lodging, self- storage, health care, data centers, etc.). The Green Street Commercial Core Property Index which tracks the core sectors and excludes lodging (multifamily, office, industrial, retail) is also down 6% year-over-year. CMBS delinquency rates continue to decline as of December except for hotels Overall delinquency rates on commercial mortgage-backed Securities declined to 7.8% in December (peak of 10.3% in June 2020). CMBS backed by hotel assets had the highest delinquency rate, at 19% (peak of 24% in June 2020) followed by retail, at 13% (peak of 18% in June 2020). CMBS backed by industrial assets had the lowest delinquency rate of 1.14%, then office, at 2.18%, and multifamily, at 2.75%. Source: Green Street Source: Trepp Source: Nareit -8.1 -6.1 -15.0 -10.0 -5.0 0.0 5.0 Jan/2019 Mar/2019 May/2019 Jul/2019 Sep/2019 Nov/2019 Jan/2020 Mar/2020 May/2020 Jul/2020 Sep/2020 Nov/2020 YoY % Change in Commercial Property Prices GreenStreet All Property Index GreenStreet Core Property Index 21.0 12.9 12.2 10.3 7.3 -9.9 -10.7 -18.4 -23.6 -25.2 Data Centers Self Storage Industrial Timber Infrastructure Health Care Residential Office Lodging/Resorts Retail Year-to-date Total Returns in Equity REITs 7.81 1.14 19.8 2.75 2.18 12.94 0 5 10 15 20 25 30 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 CMBS Marked as 30 Days + Delinquent All Industrial Lodging Multifamily Office Retail
  • 8. 3 Commercial Market Overview Net loss of occupancy in office and retail is offset by increase in industrial occupancy The office sector lost 98 million square feet of office space occupancy in 2020, but this was offset by 268 million in net occupancy in industrial buildings, according to data from Cushman and Wakefield. With the loss in office occupancy and with 25% of the workforce still working from home, office vacancy rates have increased to 15.5%, but this is still below the 17% vacancy rate during the Great Recession. Meanwhile, vacancy rates in industrial properties has decreased to 5.2% from 5.4% in 2020 Q2. Apartment vacancy rates have ticked up to 6.4% from 5.7% in 2020 Q2. Decline in office space construction in 2020 Q4, except for industrial properties The office space under construction declined somewhat from 131.5 million square feet in 2020 Q1 to 123.8 million by 2020 Q4. On the other hand, with the strong demand for industrial spaces driven by e-commerce sales, 360.7 million square feet of industrial space is underway, after construction slumped a bit to 318.6 million in 2020 Q2. Data from the U.S. Census Bureau as of November shows a decline in the total dollar value of non- residential construction done in November 2020. Source: Cushman and Wakefield 35 36 77 82 50 45 33 48 (98) 197 186 266 268 284 249 218 241 268 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net Absorption Of Industrial and Office Space in Million Square Feet Office Industrial 15.5% 5.2% 7.10% 6.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2001 Q1 2002 Q2 2003 Q3 2004 Q4 2006 Q1 2007 Q2 2008 Q3 2009 Q4 2011 Q1 2012 Q2 2013 Q3 2014 Q4 2016 Q1 2017 Q2 2018 Q3 2019 Q4 Vacancy Rates Office Industrial Retail Multifamily 123.8 360.7 - 50 100 150 200 250 300 350 400 1995 Q1 1996 Q4 1998 Q3 2000 Q2 2002 Q1 2003 Q4 2005 Q3 2007 Q2 2009 Q1 2010 Q4 2012 Q3 2014 Q2 2016 Q1 2017 Q4 2019 Q3 Millions Under Construction (Sq. Ft) Office Industrial 15.8 -26.5 -6.6 -1.8 -26.4 -30.0 -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0 Jan/2019 Mar/2019 May/2019 Jul/2019 Sep/2019 Nov/2019 Jan/2020 Mar/2020 May/2020 Jul/2020 Sep/2020 Nov/2020 Year-over-Change in the Value of Construction Spending Put in Place as of November 2020 Multifamily Lodging Office Commercial Amusement and recreation Source: US Census Bureau
  • 9. 5 Sales/acquisitions for apartments end 8% below 2019 level Acquisitions of apartment properties or portfolios of $2.5 million or over continued to recover in 2020 Q4, but the annual sales volume for 2020 of $139 billion was still 8% below the 2019 level, according to Real Capital Analytics. Concerns about ability of renters to pay rent and working from home are the likely factors dampening investor interest. According to the US Census Bureau’s Household Pulse Survey December survey, 19% of renters are not caught up on rent and 24% of workers are still working from home compared to only 6% prior to the pandemic. Decline in sales share and prices in the six major markets The six major markets (New York, Boston, Chicago, Washington DC, Los Angeles, and San Francisco) accounted for 13% of apartment sales deals. The share of the six major markets has been trending downwards since 2013 when sales accounted for about 30%. The average price per unit in the six major markets has decreased during the pandemic, from $320,000/ unit to $298,000.unit. Meanwhile, the average price in the non-major markets increased from $136,000/unit to $169,000. In 2020, the most active apartment markets in terms of dollar volume were Dallas ($10.3 B), Atlanta ($7.9 B), Phoenix ($6.4 B), Los Angeles ($5.5 B), and Denver ($ 4.9 B). Apartment Demand continues to shift to secondary markets 13.2% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 02Q1 03Q1 04Q1 05Q1 06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1 13Q1 14Q1 15Q1 16Q1 17Q1 18Q1 19Q1 20Q1 Share of Six Major Markets to Total Acquisitions/Investments of Multifamily Building Units $297,786 $168,649 $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 01Q1 02Q2 03Q3 04Q4 06Q1 07Q2 08Q3 09Q4 11Q1 12Q2 13Q3 14Q4 16Q1 17Q2 18Q3 19Q4 Average Price/Unit Six Major Markets (6MM) Non Major Markets (NMM) $10.3 $7.9 $6.4 $5.5 $4.9 $3.8 $3.7 $3.6 $3.2 $3.2 $3.1 $2.8 $2.7 $2.6 $2.5 $2.4 $2.4 $1.9 $1.9 $1.8 Dallas Atlanta Phoenix Los Angeles Denver Austin DC VA burbs Charlotte Manhattan Seattle Houston Tampa Boston NYC Boroughs Raleigh/Durham Orlando DC MD burbs No NJ San Diego San Antonio Dollar Volume of Apartment Transactions Closed in 2020 ( Billion $) ) Source of data: Real Capital Analytics $37.4 $19.3 $0.0 $10.0 $20.0 $30.0 $40.0 01Q1 02Q3 04Q1 05Q3 07Q1 08Q3 10Q1 11Q3 13Q1 14Q3 16Q1 17Q3 19Q1 20Q3 Billions Sales Transactions of $2.5M or Over In Billion Dollars Low-rise (< 4 fl) Mid/Highrise
  • 10. 5 Apartment Sales Decrease by Metro Areas Apartment transactions fell in almost all of the 53 apartment markets tracked by Real Capital Analytics. Many of the primary and bigger metro areas saw a decline in sales, led by Las Vegas, Washington DC, Seattle, San Francisco, and Houston, with sale down by 40% to 80%. Sales transactions were higher in 2020 compared to 2019 only in Indianapolis, Sacramento, Jacksonville, Palm Beach County, Salt Lake City, Kansas City, Hartford, and St. Louis. Apartment Demand continues to shift to secondary markets -43% -43% -43% -44% -46% -49% -55% -56% -57% -58% -62% -67% -75% Baltimore Inland Empire Westchester Los Angeles Pittsburgh Cleveland Philadelphia Chicago Houston San Francisco Seattle DC Las Vegas Metro Markets With the Largest Decline in Dollar Volume of Apartment Transactions in 2020 vs. 2019 Rental vacancy rate rises and rent growth slows With workers working from home, the U.S. rental vacancy rate rose from 5.7% in 2020 Q2 to 6.4% in 2020 Q3. The pace of rent growth also slowed from 3.7% in 2020 Q1 to 2.5% in 2020 Q4. According to ApartmentList.com, rents for 2-bedroom apartments declined were down in 20% of the 195 metro areas it tracks, including in the largest metro areas of San Jose (-15%), San Francisco (-15%), Boston (-13%), Seattle (-11%), Washington DC (-8%), New York (-8%), and Chicago (-6%). 4% 6% 8% 10% 13% 22% 23% 72% St Louis Hartford Kansas City Salt Lake City Palm Beach Co Jacksonville Sacramento Indianapolis Metro Markets With Higher Dollar Volume of Apartment Transactions in 2020 vs. 2019
  • 11. 7 The dollar sales volume of office property acquisitions continued to recover in 2020 Q4, but the full-year sales transaction volume of $86 billion was still 40% below last year’s level. Sales transactions of offices in the central business district (CBD) fell more (-48%) compared to sales of offices in the suburbs (-35%), an acceleration of the trend since 2013 towards suburban offices. Sales in the major metro areas (New York, Boston, Chicago, Washington DC, Los Angeles, San Francisco) were down by 38%, with the share of office units in the six major markets falling to 32%, from 40% in 2020 Q1. Of the 52 office markets tracked by Real Capital Analytics, only six metros had more sales transactions in 2020 compared to 2019: Raleigh- Durham, Indianapolis, Detroit, Cincinnati, Pittsburgh, and Northern New Jersey. Office Secondary/tertiary markets gain market share Source of data: Real Capital Analytic $9.8 $17.8 $- $10 $20 $30 $40 $50 01Q1 02Q2 03Q3 04Q4 06Q1 07Q2 08Q3 09Q4 11Q1 12Q2 13Q3 14Q4 16Q1 17Q2 18Q3 19Q4 Billions Sales Transactions of $2.5M or Over In Billon Dollars Office - CBD Office - Sub 76% 40% 50% 60% 70% 80% 90% 100% 02Q1 03Q2 04Q3 05Q4 07Q1 08Q2 09Q3 10Q4 12Q1 13Q2 14Q3 15Q4 17Q1 18Q2 19Q3 20Q4 Share of Suburban Office Units to Total Sales $269 $492 $1 $101 $201 $301 $401 $501 $601 01Q1 02Q2 03Q3 04Q4 06Q1 07Q2 08Q3 09Q4 11Q1 12Q2 13Q3 14Q4 16Q1 17Q2 18Q3 19Q4 Average Price Per Square Foot Suburbs CBD 32% 0% 20% 40% 60% 80% 02Q1 03Q1 04Q1 05Q1 06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1 13Q1 14Q1 15Q1 16Q1 17Q1 18Q1 19Q1 20Q1 Share of Office Units in the Six Major Markets to Total Sales 88% 37% 15% 8% 8% 4% Metro Markets With Higher Dollar Volume of Office Transactions in 2020 vs. 2019
  • 12. 8 Loss of 98 million square feet of office occupancy in 2020 With about a quarter of the workforce working from home, office occupancy fell by 98 million square feet in 2020. (Note: a football field is about 57,000 sq, feet, so 98 msf is approximately 1,720 football fields or 33 football fields per state!). The largest loss of office occupancy were in San Francisco and New York, each with 9 million loss of office occupancy, followed by Boston (7.5 MSF) and Dallas ( 5 MSF). Most metro areas that saw an increase in office occupancy were secondary or tertiary areas, except New York Brooklyn. These are Raleigh-Durham, Hampton Roads, Boise, Milwaukee, Fort Myers, Northern Virginia, Colorado Springs, Brooklyn, and Syracuse. Office Secondary/tertiary markets gain market share Source of data: Real Capital Analytic -2.0 -2.2 -2.3 -2.3 -2.4 -2.4 -2.4 -2.7 -3.2 -3.8 -4.0 -4.2 -4.4 -5.0 -7.5 -9.0 -9.1 New York - Downtown Seattle Orange County San Diego New Jersey - Central Austin Chicago San Jose Denver Oakland/East Bay Los Angeles Non-CBD New York - Midtown South Houston Dallas Boston New York - Midtown San Francisco Metro Areas with the Largest Loss of Office Occupancy (million sq.ft.) in 2020 27,984 169,537 176,285 296,335 352,581 388,496 596,535 631,136 844,190 Syracuse New York - Brooklyn Colorado Springs Northern VA Fort Myers/Naples Milwaukee Boise, ID Hampton Roads Raleigh/Durham Metro Areas with an Increase in Office Occupancy (million sq.ft.) in 2020
  • 13. 9 Industrial Industrial Q4 2020 sales exceed Q1 2020 levels, but down 2% y/y Investor acquisitions of industrial properties or portfolio acquisitions of $2.5 million or over for the entire 2020 year, decreased 16% year-over-year as transaction volume for both flex and warehouse properties totaled $98.8 billion. Sales for 2019 totaled $117.4 billion. While the industrial total was down year-over-year, Q4 2020 volume exceeded Q1 2020 levels. The Q4 2020 volume was $36.1b in comparison to Q1 2020 $33.3b as investors continue to favor industrial properties as a result of the acceleration of e-commerce. With the acceleration of e-commerce, warehouse property growth continues to increase at record levels. The average price per square foot of industrial acquisitions in Q4 increased by $6 from Q1. The average price per square foot for flex properties fell to $138/sq. ft., down from $164/sq. ft. recorded in Q3. Warehouse average price per square foot increased $8 from the Q3 level towards $99 in Q4, which indicates price growth for warehouse properties. Warehouse acquisitions continue to account for majority of industrial transactions, as it increased its share of total industrial volume to 83%, up from 74% in Q3. Year-to-date as of December 2020, the most active markets with respect to industrial property acquisitions were Los Angeles (469), Chicago (432), Dallas (303) and Atlanta (235). $6 $30 $- $5 $10 $15 $20 $25 $30 $35 $40 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 Billions $ Source: NAR analysis of RCA Data QTR Industrial Sales Transactions of $2.5M or Over as of December 2020 (in Billions $) Flex Warehouse $138 $99 $105 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 '01'02'03'04'05'06'07'08'09'10'11'12'13'14'15'16'17'18'19'20 Source: NAR analysis of RCA Data QTR Average Sales Price Per Square Foot for Industrial Properties Flex Warehouse All Industrial 469 432 303 235 201197181178164160160 133121117112111107 0 50 100 150 200 250 300 350 400 450 500 Most Active Industrial Markets by Number of Property Acquisitions in Jan-Dec 2020
  • 14. 10 Industrial Industrial records set Rental vacancy rate remains unchanged from the prior quarter The U.S. rental vacancy rate increased from 4.9% in 2020 Q1 to 5.1% in 2020 Q2. Q3 2020 saw 5.2% and Q4 2020 5.2% as well as rental vacancy rates remains unchanged. The lowest vacancy rates in U.S. were in the following markets : Orange County (2.0%), Nashville (2.1%), New Jersey-Central (2.2%) and Los Angeles (2.4%). Net absorption sets quarter record U.S. net absorption set a quarter record in Q4 2020 with 89.8 million square feet. New leasing activity in Q4 2020 saw 178.8 msf, another quarter record. Across 2020 the four quarters totaled a new record of 659.1 msf. New record set for industrial asking rents U.S. industrial asking rents were solid across the 2020 year, as they increased every quarter from $6.46 in Q1 to $6.58 in Q2. Q3 rents were $6.63 and Q4 rents were $6.76 for which, Q4 2020 asking rents represent a new record high rent level. The west saw the highest asking rents with $9.62 for Q4 2020. 5.2% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2001Q2 2002Q3 2003Q4 2005Q1 2006Q2 2007Q3 2008Q4 2010Q1 2011Q2 2012Q3 2013Q4 2015Q1 2016Q2 2017Q3 2018Q4 2020Q1 QTR Industrial Vacancy Rate 89,814,535 -40,000,000 -20,000,000 0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 2010 Q1 2010 Q4 2011 Q3 2012 Q2 2013 Q1 2013 Q4 2014 Q3 2015 Q2 2016 Q1 2016 Q4 2017 Q3 2018 Q2 2019 Q1 2019 Q4 2020 Q3 QTR Industrial Net Absorption $6.76 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 2010 Q1 2010 Q4 2011 Q3 2012 Q2 2013 Q1 2013 Q4 2014 Q3 2015 Q2 2016 Q1 2016 Q4 2017 Q3 2018 Q2 2019 Q1 2019 Q4 2020 Q3 QTR Industrial Rents 178,808,80 2 0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 160,000,000 180,000,000 200,000,000 2010 Q1 2010 Q4 2011 Q3 2012 Q2 2013 Q1 2013 Q4 2014 Q3 2015 Q2 2016 Q1 2016 Q4 2017 Q3 2018 Q2 2019 Q1 2019 Q4 2020 Q3 QTR Industrial Leasing
  • 15. 11 Retail Q4 2020 acquisitions of retail properties near Q1 2020 levels Commercial sales/acquisitions of retail properties or portfolio acquisitions of $2.5 million or more recorded $37.7 billion throughout 2020. This represents a year-over- year decrease of 43% as retail was heavily affected by the coronavirus pandemic. On a quarterly basis, retail volume was $11.9b in Q4 2020, which represents a decreases of 42% year-over-year with respect to the same period. But against the prior quarter, Q3, the Q4 figure represents a 64% increase. With decreasing property prices for the majority of 2020, the average price per square foot for all of retail was $191/sq. ft. in Q4 where shops averaged $294/sq. ft. and centers averaged $127/sq. ft. Sales of shopping centers accounted for 51% of all retail transactions in 2020. In Q4 2020 centers saw its share increase by accounting for more than 55% of all retail transactions. Year-to-date as of December 2020, the most active markets with respect to retail property acquisitions were Los Angeles (228), Chicago (155), Dallas (155) and New York City Boroughs (138). $5 $7 $- $5 $10 $15 $20 $25 $30 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 Billions $ Source: NAR analysis of RCA Data QTR Retail Sales Transactions of $2.5M or Over as of December 2020 (in Billions $) Shops Centers $294 $127 $191 $- $100 $200 $300 $400 $500 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 Source: NAR analysis of RCA Data QTR Average Sales Price Per Square Foot for Retail Properties Shops Centers All Retail 228 155155 138 122115102 76 74 69 65 64 62 62 62 61 57 0 50 100 150 200 250 Source: NAR analysis of RCA Data Most Active Retail Markets by Number of Property Acquisitions in Jan-Dec 2020
  • 16. 12 Retail Sales transactions volume continue recovery in Q4 2020 The dollar sales volume of retail property acquisitions in the six major markets (6MM which are New York, Boston, Chicago, Washington DC, Los Angeles, and San Francisco) continued to recover in 2020 Q4, but the full-year sales transaction volume of $21 billion was still 38% below last year’s level and down on a quarter year-over-year basis of 32%. Dollar sales volume for the non major markets (NMM) was highest in Q4 2020 as transaction volume was $8.1 billion. Annually, NMM sales transaction volume totaled $24.7 billion and was down 45% year-over-year. 6MM Q4 2020 retail sales transactions of centers accounted for 50% of transactions where as NMM, centers account for more than 57% of retail sales transactions. Q4 average sales price per square foot of retail space in the 6mm fell (-8%) compared to price per square foot of retail in the NMM which grew (2%). Q4 average cap rates for both 6mm and NMM remain flat from the prior quarter, 6.0% and 6.8% respectively. $4 $8 $- $5 $10 $15 $20 $25 $30 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 Billions 6MM vs NMM QTR Retail Sales Transactions of $2.5M or Over as of December 2020 (in Billion $) 6MM NMM $335 $155 $- $100 $200 $300 $400 $500 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 6MM vs NMM QTR Average Sales Price Per Square Foot for All Retail Properties 6MM NMM 6.0% 6.8% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 6MM vs NMM QTR Average Cap Rates for All Retail Properties 6MM NMM 290 917 0 500 1,000 1,500 2,000 2,500 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 6MM vs NMM QTR Number of Properties 6MM NMM
  • 17. 13 Sustained Growth in Online CPG Sales The acceleration of e-commerce last year, on-the-whole, has been well documented, but let us dive a little deeper into the online sales trends of the U.S. CPG industry (consumer packaged goods). While the e-commerce portion of the U.S. CPG industry, comprised of food & beverage, general merchandise, homecare and health & beauty, remains a small portion of total CPG sales today, it remains at an elevated level. According to IRI data, online CPG growth is quite strong. Online CPG sales continued its year-over-year expansion, increasing 64% for the four weeks ending December 27, 2020. This represents a 1% increasing difference from the 63% y/y recorded in the prior period. The increase in online CPG sales was underpinned by consumers shift towards online shopping as consumers continued to shop online throughout the holiday season given increasing COVID cases and the return of lockdowns in some states. The chart below illustrates the online sales growth by CPG department type. Total U.S. CPG e-commerce growth was driven by growth in the Total Edible department. Total Edible CPG e- commerce sales grew 79% year-over- year for the four weeks ending on December 27, 2020 which is a slight decrease from the prior periods 84% year-over-year growth rate. Total Edible (food & beverage), continues to see elevated levels and the most significant increases with respect to the other categories as it is supported by consumers continuing to stay in and prepare meals at home. 64% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% *Note: Each date represents rolling 4 weeks Source: NAR analysis of IRI E-Market Insights data Total CPG E-Commerce Sales Y/Y Percent Change 64% 79% 57% 0% 20% 40% 60% 80% 100% 120% 140% *Note: Each date represents rolling 4 weeks Source: NAR analysis of IRI E-Market Insights data Total CPG E-Commerce Sales, by Department Type (Y/Y Percent Change) Total CPG E-Com Total Edible E-Com Total Non-Edible E-Com
  • 18. 14 Sustained Growth in Online CPG Sales Within Total Edible, Refrigerated Foods continue to outpace the other food categories in CPG online sales. Refrigerated Food growth, led with 95% year-over-year growth in online food sales in the four weeks ended December 27, 2020. Refrigerated Food growth also outpaces growth for Total Non-Edible categories as well with Total Non-Edible department, Home Care, closely following with 91% year-over-year growth. So, what does all of this mean? The effects of the coronavirus pandemic have reinforced the position of CPG e- commerce with accelerated online shopping trends and changes in consumer spending habits fueling the online channel’s December period increase as growth remains at higher levels than pre-COVID levels. Provided the current state of increasing COVID cases and with some vaccine distribution currently underway, current consumer meal preparation, staying at home and online shopping trends may maintain CPG e-commerce growth levels moving forward. As consumers spend more time in the current pandemic-induced environment, online spending behavior and e-commerce are likely to become ingrained into consumers spending habits post-pandemic. 81% 95% 67% 76% 40% 67% 91% 65% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 12.27.20 Source: NAR analysis of IRI E-Market Insights data CPG E-Commerce Sales, by Category, Four Weeks Ended December 27, 2020 (Y/Y Percent Change) General Food Refrigerated Beverages Frozen Beauty Health Home Care General Merchandise
  • 19. ©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 data@realtors.org. Download report at: https://www.nar.realtor/research-and-statistics/research-reports/commercial-research COMMERCIAL MONTHLY INSIGHTS REPORT January 2021 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 Research Manager
  • 20. 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 real property. NATIONAL ASSOCIATION OF REALTORS® RESEARCH GROUP The Mission of the NATIONAL ASSOCIATION OF REALTORS® Research Group is to produce timely, data-driven market analysis and authoritative business intelligence to serve members, and inform consumers, policymakers and the media in a professional and accessible manner. To find out about other products from NAR’s Research Group, visit www.nar.realtor/research-and-statistics 500 New Jersey Avenue, NW Washington, DC 20001 202.383.1000