Crexi National Commercial Real Estate Report: December 2022

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Welcome to the December 2022 release of our Crexi Trends report. Each month, we analyze Crexi’s database to identify relevant activity and patterns to share key insights with our users. 

Our report showcases trends found across Crexi’s commercial property listings in December, evaluating average price per square foot, search behavior, occupancy, and other noteworthy metrics. With this information in hand, we hope to arm principals, tenants, and brokers alike with actionable learnings to make well-informed commercial real estate decisions.

chart of asset type average price per sf changes in 12/2022
Average Asking Price per Square Foot and Changes Month-over-Month

Overall, asking prices dropped month-over-month in a likely bid to close deals ahead of 2023.

The average asking price per square foot for December-added assets dropped 5.6%, compared to November listings. Several factors may have played a role in the adjustment, particularly if sellers were attempting to attract demand ahead of the new year. The pricing adjustment may also be sellers’ attempts to catch buyer interest in anticipation of a potential slowdown in spending early in 2023.

Office property for sale saw the largest pricing gains, while steady leasing rates point to promising sector recovery.

Offices were the only asset type to experience a rise in average sale asking price in December. Valuations rose nearly 3% in December compared to November, coming off a period of relative stagnancy for the sector most impacted by the pandemic. On the leasing side, office asking rates held steady, with little change compared to more impacted asset classes.

Industrial and multifamily property types experienced pricing contraction, a tapering off of pandemic-era growth. 

Conversely, the post-COVID standouts industrial and multifamily saw significant pricing contractions in December compared to healthy, sustained growth periods. These adjustments are more likely a tapering off from the extreme growth following the pandemic, as these desirable sectors are still very much in demand.

Industrial assets’ asking prices dropped 7.7% and experienced a slight occupancy dip in December, though this may be due to new deliveries coming online at the year’s end. Multifamily asking prices contracted 5.9%, minimizing gains made in October and November.

Restaurants and hospitality posted impressive comebacks in asking rents.

While overall asking rates rose a slight 1.67% in December, restaurants led the charge in tenant demand by commanding an impressive 10.7% jump in asking rents compared to the previous month. This parallels a reported recovery in the hospitality sector, which added approximately 67K jobs last month, and indicates promising changes ahead, particularly following the hard hit to demand in the previous few years of restricted travel.

Retail space for lease also posted modest gains last month, with rates increasing 5.5% compared to November.

Buyer search activity slows down, indicating the search for good deals vs. market-specific acquisitions.

While Houston, New York, and Chicago claimed the top three spots for most-searched-for cities in December, they’re on the leaderboard of a general downward trend in buyers searching for acquisitions by cities. The majority of top metros experienced declines in buyer searches by city name. However, this doesn’t necessarily spell a downward trend in overall buyer activity, as approximately the same number of deals closed in Houston in December as in November. It’s likely that buyers are on the hunt for the best possible deal and are otherwise narrowing search parameters by criteria without limiting themselves to specific markets.

On the leasing side, however, this change didn’t appear. Tenants continued using city terms to search for new for-lease acquisitions, with Tucson, AZ leading with more than 21% more searches than the previous month. New York City and Jacksonville, Florida, increased 1.43% and 2.77%, respectively, taking the second and third place spots for increased tenant searches.

Highest Average Asking Price per Square Foot By MSA — December 2022

Disclaimer: This article’s information is based on Crexi’s internal marketplace data and additional external sources. While asking price in many ways reflects market conditions, variations in pricing are affected by changes in inventory, asset size, etc. Nothing contained on this website is intended to be construed as investing advice. Any reference to an investment’s past or potential performance should not be construed as a recommendation or guarantee towards a specific outcome.

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Crexi Insights

Marketing Team at Crexi

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