COMMERCIAL REAL ESTATE INDEX
maintained upward momentum in the
second quarter. The SIOR Commercial
Real Estate Index, representing second
quarter 2016 data, increased 3. 6 points
from the first quarter of 2016. Compared
with the prior year, the index rose 3. 8
percent. The national index, based on 10
variables pertinent to the performance
of U.S. industrial and office markets,
closed at 123.1. 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 highest value recorded
since index’s inception, and the ninth
quarter with a value above the 100-point
threshold since the Great Recession.
The pace of growth in professional and
business services employment drove
activity in SIOR office markets. The
office index reached a value of 115.0,
7. 2 points higher than the prior quarter
and 8. 2 points higher year-over-year.
The industrial sector maintained its
strong upward trajectory, with the
index recording a value of 128.5, 2. 9
points higher than the prior quarter.
Both property indices have been over
the 100-point value for at least the past
eight quarters, indicating strong demand for space.
SIOR members reported rising fundamentals, with positive developments in
leasing and sales.
• Leasing activity exceeded historical
levels for 48 percent of SIORs who
responded to a market survey.
• Rents posted slight declines 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
68 percent of respondents reporting
lower availability rates.
• Subleasing availability has become
marginal, with only 4 percent of SIOR
• New construction of office and in-
dustrial spaces improved, with over
41 percent of SIOR members reporting
new construction during the quarter.
• Development conditions continued
shifting in favor of sellers during the
period, with 56 percent of SIORs rating
it a seller’s market. Investment prices
stayed level, with 35 percent of markets being below construction costs.
Local economies continued improving
providing upward momentum to real
estate markets. Only 11 percent of SIOR
respondents felt that their local economy was slowing or contracting, while
55 percent considered their economy to
be strong and improving. Meanwhile,
with the moderate second quarter, the
national economy’s impact was felt on
local markets, with 38 percent of SIOR
responses indicating a positive impact
upon markets. In contrast, 19 percent
of SIOR respondents experienced a
SIOR INDEX BY REGION
Source: SIOR, NAR
2005 2006 2008 2007 2009 2010 2011 2012 2013 2014 2015 2016