The labor force participation (LFP) rate
decreased slightly and continued to hover at historic lows. The LFP rate was
62. 8 percent in the first quarter of 2015,
remained flat in the second quarter, and
slid to 62. 5 percent in the third quarter.
In comparison, before the Great Recession the LFP rate was 65. 9 percent. With
the Baby Boomers retirement wave rising and discouraged workers keeping
out of the labor force, economic growth
is likely to remain moderate. Currently,
94.7 million Americans are not in the labor force, of which 5. 6 million were estimated to want a job; this is in addition
to the 7. 9 million Americans currently in
the labor force but unemployed.
Commercial Real Estate Investments
Investments in large commercial real
estate markets (transactions above $2.5
million) totaled $115 billion in the third
quarter, based on data from Real Capital
Analytics (RCA). The sales volume represented a 3.0 percent year-over-year advance. According to RCA’s Commercial
Property Price Index, transaction prices
rose 14. 2 percent in the third quarter, as
cap rates moved sideways to a national
average of 6. 9 percent across the property types.
Sales volume in smaller markets (
transactions below $2.5 million) rose 7.0
percent, based on data from the National Association of REALTORS®
(NAR). Prices in the smaller markets
increased by 3. 8 percent year-over-year.
Capitalization rates averaged 7. 9 percent
across all property types, an 26 basis
point decline from the previous year.
SIOR Index Results
SIOR computes an index of economic
activity for the commercial real estate
sector on a quarterly basis, presenting
trends and developments in commercial
markets. The SIOR Commercial Real
Estate Index is based on quarterly input from SIOR members, current as of
October 2015. As the pace of economic
growth rebounded, office and industrial
markets experienced gains. The SIOR
Commercial Real Estate Index, representing third quarter 2015 data, rose 2. 3
points. The national index, based on 10
variables pertinent to the performance
of U.S. industrial and office markets,
closed at 120.9. It was the sixth consecutive quarter above 100, the threshold indicating improving market conditions.
With employment in office-using indus-
tries continuing to increase, SIOR office
markets solidified the gains of the past
few quarters, with the index rising 7. 3
points in the third quarter, positively
above a value of 100. The SIOR indus-
trial markets rode the tail winds of trade
and higher consumer spending, gaining
1. 3 points to a value of 126.8, the eighth
consecutive quarter above 100.
SIOR members reported that, on balance,
fundamentals continued improving:
• Leasing activity remained on par
with last quarter’s, with 56 per-
cent of SIOR respondents report-
ing it above historical levels.