Office, Industrial Broker Sentiment Improves Slightly
Industrial and office sector brokers reported slightly improved market confidence in May.
The Society of Industrial and Office Realtors, Washington, D.C., said its monthly Sentiment Survey increased 18 basis points during May to 6.22 on a 10-point scale.
“Activity the first three to four weeks [of the pandemic shutdown] was at a complete standstill,” one survey respondent who specializes in industrial real estate said. “Activity has picked up and has become busy.”
That respondent said it was difficult to get deals done at the moment because tenants and buyers expect bargains and the landlords and sellers are not ready to do major deals. “I believe industrial will be good, office will have a major setback and will be slow to come back and retail will be squashed for a while,” the broker said.
Regionally, the West and the Northeast showed some of the lowest confidence levels, SIOR said. Industrial brokers in the Mid-Atlantic and Northwest continued to share the highest levels of confidence, while office brokers in the Northeast and West reported having the least confidence.
“Our industrial deals seem to be moving forward, some delayed, but will close in due time,” one survey respondent said. “The office lease transactions have stopped or have slowed down to a school zone pace.”
SIOR also studied differences in local market confidence between independent firms and large firm or network brokers. Those in large firms and networks noted lower confidence in the Central, Great Lakes and Northwest regions and substantially higher confidence in the South and West regions.
SIOR noted “significant changes” in the overall status of current transactions. There was just over a five percent increase in transactions progressing on schedule and a slight decrease in the number of transactions placed on hold by clients, dropping just over 3 percent.
“People forget, we lag the economy in commercial real estate as our deals take months and years,” one office specialist said. “The real pain of this shutdown will be felt over the next six to 12 months.”