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Commercial Prices Continue to Rise Slowly

11/10/2014
commercial real estate market trends, capital markets

Coming out of the crash in the later years of last decade and into the early part of this one, many analysts and real estate professionals thought that the recovery would occur much faster. While there has been some strong growth in recent years, and 2013 saw commercial real estate prices rise at a rate of 15.3 percent, confidence is down this year and for the next few years according to a survey conducted by the ULI and growth seems to be slowing according to hard data as well. 

According to the survey conducted this fall, economists expect growth of commercial real estate prices to come in at under 10% for 2014, 6% in 2015, and 5% for 2016. While it's not necessarily a positive view for the upcoming few years from economists, it has to be taken in perspective. Price growth in the commercial real estate market has been strong the last few years, and a sustained growth of 15% would return the market to the pre-bubble levels much more rapidly than the market is most likely ready for. So, while the forecast is for a reduction in growth, and the numbers seem to be bearing that out, it is far from a grim forecast and still shows solid growth in the commercial real estate market over the next few years. 

The following chart is courtesy of the Urban Land Institute:

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