Commercial real estate market sees continued price appreciation in 2019
See what factors have driven an increase in commercial real estate prices – across all sectors – and how the CRE market may develop going forward.
July 19, 2019 | 2 minute read
In May, U.S. commercial real estate (CRE) prices saw their largest monthly climb in nearly 4.5 years, fueled by a surge in the multifamily/apartment and industrial sectors. On an annualized basis, CRE prices rose approximately 7.2%, again thanks to double-digit growth in the industrial sector.1
May’s activity was well above the YTD pace, which has been characterized by continued price growth, though at a generally slower rate than in recent years. Specifically, CRE markets have drawn strength through much of this cycle from the prolonged low-interest rate environment along with more-conservative underwriting standards enhanced by post-crisis regulation.
Certain sectors have also benefited from supportive secular trends. Industrial, for example, has seen extraordinary growth driven primarily by e-commerce and the related demand for distribution and logistics centers.
As the chart shows, however, each sector across the CRE market – including retail, the focus of significant concern and job loss – has seen prices rise to varying degrees in recent years, including through the first months of 2019.1