Ten-X (formerly Auction.com), an online real estate marketplace, has released its latest – and newly rebranded – Ten-X Commercial Real Estate (CRE) Nowcast which reveals that commercial valuations in December increased 26 basis points from November, a healthy showing despite divergent valuation patterns across the five major commercial sectors. Here’s the scoop:
Four property segments saw valuations increase in December according to the pricing index, which combines Google Trends data, Ten-X’s proprietary transaction database and investor surveys to forecast CRE pricing trends in real time. Retail valuations increased 79.5 basis points for the month, apartment increased 72.7 basis points and office increased 17.1. But the most significant gain was seen in the industrial sector, which rose 335.3 basis points, bringing the sector’s nowcast level 19.3 percent above its year-ago level and possibly impacting performance in other sectors.
“After lagging the other commercial segments for years, the industrial sector has recently taken off,” said Ten-X Chief Economist Peter Muoio, who cited the sector’s increasing rents and sharp improvement in vacancies as key contributors to its standout performance. “As perhaps the only commercial property segment to benefit from technology changes through e-retail fulfillment demand, Industrial is getting a lot of attention from investors. Bidding activity has increased for industrial properties offered on our online auction platform and investor sentiment is bullish.”
Meanwhile, hotel valuations saw a sharp downturn, dropping 275.3 basis points for the month following a similarly lackluster showing in November. Muoio noted that investors appear to have turned bearish on this particular sector as the strengthening dollar has hurt foreign travel to the U.S. and encouraged Americans to vacation abroad, and as innovations like Airbnb have increased shadow competition.
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