The SIOR Commercial Real Estate Index, representing second
quarter 2015 data, rose 1. 8 points. The national index, based
on 10 variables pertinent to the performance of U.S. industrial
and office markets, closed at 118.6. It was the fifth consecutive
quarter above 100, the threshold indicating improving
With employment in office-using industries continuing to
increase, SIOR office markets solidified the gains of the past
few quarters, with the index rising 4.0 points in the second
quarter, positively above a value of 100. The SIOR industrial
markets rode the tail winds of trade and higher consumer
spending, gaining 1. 8 points to a value of 125.5, the seventh
consecutive quarter above 100.
SIOR members reported that, on balance, fundamentals
• Leasing activity remained on par with last quarter’s,
with 54 percent of SIOR respondents reporting it above
• Rent growth moved sideways for office and industrial
properties—96 percent of respondents reported that rents were
in line with or above long-term averages; only 4 percent of
SIOR respondents considered that asking rents were below
those of one year ago.
• Vacancies were reported as steady, with 75 percent of
respondents reporting lower availability rates.
• Tenant concessions continued declining, with 26 percent
of SIOR respondents reporting moderate to deep discounts
• New construction of office and industrial spaces improved,
with 31 percent of SIORs reporting new construction during
• Development conditions continued shifting in favor of sellers
during the period, with 47 percent of SIOR members rating it
a seller’s market.
• Investment prices stayed level, with 43 percent of respondents
reporting them below construction costs.
As the national economy picked up momentum, local
economies continued improving, boosting real estate markets.
According to questionnaire responses, 53 percent of markets
experienced a strong and improving local economy. Only 18
percent of SIORs felt that their local economy was slowing
or contracting. In comparison, 42 percent of SIOR members
considered the national economy to have had positive impact
upon their markets.
Regionally, market performance proved mixed, as the
Northeast and West rose, reversing the prior quarter’s decline.
The West posted the highest SIOR index value across all
regions—126.2, the first time since the second quarter of 2007.
Positively, all four main regions recorded SIOR index values
above 100, signifying market expansion. The South had the
second highest SIOR index value—120.1.
Looking ahead at the third quarter of 2015, SIOR members
remained upbeat, with 75 percent of respondents pointing to
growth in the 1-15 percent range. Only 5 percent of SIOR
members expected conditions to decline.