Commercial Real Estate Index
Commercial Real Estate Solutions
Roanoke, Virginia 24011
Transactions Completed in Over 135
CCIM, SIOR, CPM, CRE
President & Managing Broker
SIOR Index Results
After three quarters of consecutive gains, office
and industrial spaces slowed during the second
quarter. The Commercial Real Estate Index,
representing second quarter 2012 data, declined
0.3 points. The national index, based on 10
variables pertinent to the performance of U.S.
industrial and office markets, closed at 70.7. In
a split, the office sector decreased 7. 7 points to
an index value of 61.9, while the industrial sector rose 4. 7 points to 76.1, mirroring increases
in demand for warehouses due to larger international trade volume.
The general stagnation in national economic
conditions spilled over into commercial markets.
Geographically, the Midwest and West showed
improved conditions. The Midwest posted the
highest nominal index value during the second
quarter—74.3. Markets in the West improved
the most over the quarter, advancing 5. 4 points.
The Northeast and South declined 9. 4 points and
3. 9 points, respectively.
With employment moderating, leasing activity took a step back, as almost two thirds of
respondents found activity below historic levels. Vacancy rates notched down slightly— 51
percent of SIORs pointed to vacancies which
are lower than a year ago. Concessions remain
the norm for 78 percent of respondents. In turn,
rents flattened, as half of practitioners reported
rents in line with or slightly above long-term
averages. Subleasing availability was mostly
unchanged from the first quarter, with 23 percent of SIORs reporting ample sublease space.
In an encouraging sign, construction of
new commercial space is slowly moving
upward— 35 percent of practitioners mentioned
there was new construction in their market, an
improvement from the 15 percent figure a year
ago. Development conditions continued to
strengthen—as they remain in buyers’ favor—
acquisition prices were lower than construction costs in 76 percent of the markets. A weak
national economy is acting as a drag on local
economies and markets—81 percent of SIORs
found the national economy to have a negative
impact upon their markets (compared with 69
percent in the first quarter).
Looking at the broader landscape, commercial markets are following economic trends and
treading water for the time being. SIOR members expect conditions to remain moderately
positive in the second half of 2012—59 percent
of respondents anticipate better markets in the
next three months, while 32 percent project no