SIOR Index Results
In slight contrast with the economic momentum, office, and industrial markets
benefitted from rising demand and a positive investment environment. The SIOR
Commercial Real Estate Index, representing fourth quarter 2015 data, gained 1. 9
points from the third quarter. Compared
with the fourth quarter 2014, the index rose
5. 6 percent. The national index, based on 10
variables pertinent to the performance of
U. S. industrial and office markets, closed at
122.8, the highest value since its inception.
An index value of 100 shows a balanced
market, meaning that the national index
has surpassed its historical average, and
is pointing to growing conditions. The figure represents the seventh quarter with a
value above the 100-point threshold since
the Great Recession.
With professional and business services
employment rising, SIOR office markets
registered strong values. The office index
reached a value of 112.9. The industrial
sector maintained its upward trajectory,
Both property indices have been over the
100-point value for at least the past six
quarters, indicating strong demand for
space.
SIOR members reported rising fundamentals, with positive developments in leasing
and sales.
• Leasing activity exceeded historical levels for 58 percent of SIORs who responded
to a market survey.
• Rents were flat for office and industrial
properties—only 4 percent of SIOR members considered that asking rents were
below those of one year ago. Meanwhile,
96 percent ascertained that rents were in
line with or above long-term averages.
• Vacancies continued declining, with 81
percent of respondents reporting lower
availability rates.
• Subleasing availability has become
marginal, with only 20 percent of SIOR respondents feeling that tenants benefitted
from concessions.
• New construction of office and industrial
spaces improved, with over a third of markets reporting new construction during the
quarter.
• Development conditions continued shifting in favor of sellers during the period,
with 51 percent of SIORs rating it a seller’s
market. Investment prices stayed level,
with 39 percent of markets being below
construction costs.
Improving local economies boosted real
estate markets. Only 15 percent of SIOR
respondents felt that their local economy
was slowing or contracting, while 57 percent considered their economy to be strong
and improving. Meanwhile, even with the
fourth quarter slowdown, the national
economy exerted a positive impact on
local markets, with almost half of SIOR responses indicating a positive impact upon
markets. In contrast only 15 percent of
SIOR respondents experienced a negative
impact upon their markets from national
economic conditions (the remainder was
neutral).
COMMERCIAL REAL ESTATE INDEX
Industrial FDI activity
surpasses Office by
$6.6 billion, or 34.0%
CRE SALES PRICE Real Capital Analytics CRE Markets KEY REALTOR CRE Markets
20
10
0
- 10
- 20
- 30
- 40
10
5
0
- 5
- 10
- 15
- 20
- 25
2010 2011 2012 2013 2014 2015 2009
Source: SIOR, NAR