Crexi National Commercial Real Estate Report: July 2023

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Welcome to the July 2023 release of our Crexi Trends report. We analyze Crexi’s database each month to identify relevant activity and patterns to share key insights with our users. 

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

What the Data Says

  • Asking prices jumped an encouraging 4.7% marketwide in July, providing sunny numbers following a relatively stagnant Q2. In the same period, cap rates compressed from 6.56% to 6.33% for new listings.
  • Occupancy measurements didn’t move, compared to June counts, with the average occupancy just shy of 80% marketwide and across asset classes.
  • In July, slightly fewer new assets came onto Crexi’s for-sale marketplace, with inventory lowering by 11.2% compared to what was added in June. 

Average Asking Price per Square Foot and Changes Month-over-Month

  • Industrial was the only asset class that posted any pricing declines last month, though the change was down only 2.4% from June averages.
  • All other asking types posted promising gains month-over-month. Office, in particular, welcomed a 4.1% gain in asking prices, though its occupancy averages are still at a low 61%, slightly down from June’s 63%. 
  • New retail listings produced the most pricing gains in July, up 6.5% from June averages. Occupancy remained strong, with little change from the previous month’s 84% average.

Key Takeaways

  • The noticeable increase in average asking prices, combined with a slowing inventory, suggests a shift of some transactional power back to the seller’s corner. Sellers who can wait out potential market shifts realize they can be patient for the right price and buyer, especially those possessing good real estate and solidly-proven asset classes.
  • Retail’s performance further demonstrated the sector’s quiet resilience to shifting macroeconomic factors, especially when compared to post-pandemic darlings, industrial and multifamily.
  • In industrial’s pricing crunch, we see some correction and mildly cooled demand due to new deliveries, despite general sector health. July maintained similar amounts of unpriced listings as the previous month, suggesting continued seller desire to gently handle pricing conversations later in the transaction process.

What the Data Says

  • Overall average asking rates rose 3.1%, recovering quite a bit from June’s numbers, hitting an average of $1.20 per square foot monthly. 
  • In the same period, we observed a significant dip in new listings, with a 28.8% drop from new offerings in June. Similar to last month, unchanged occupancy rates on Crexi’s for-sale side indicate that leases are still getting signed amid reduced supply.
  • Industrial asking rates hit an impressive 8.9% on average in July, increasing $0.96 per SF per month.
  • In office leases, average asking rates jumped an impressive 6.3% compared to June metrics. In the same period, supply constricted some, posting 21% fewer new lease offerings than the previous month. 
  • Restaurants’ average asking rate dropped 2.9% in July, while retail rates didn’t shift.

Key Takeaways

  • Industrial and office assets were the primary asset classes responsible for overall leasing gains. Offices, in particular, made impressive leasing recoveries in July, reclaiming their highest average since March 2023, alongside a much more limited inventory than any period since July 2022.
  • Retail’s asking rates have moved less than 0.5% in either direction since April of this year. This lack of movement suggests a similar steadiness to what was observed on Crexi’s for-sale side, where long-term leases and stable tenants – especially in NNN leases — represent a consistent ROI compared to some other sectors.

Regional Breakdown

What the Data Says

  • Houston, Dallas, and Chicago ranked in July’s top three slots for most-searched cities. However, while Houston didn’t see any growth in the same period, Dallas and Chicago attracted 2.7% and 7% more buyer search activity than the previous month.
  • Of note, Los Angeles-related buyer activity was down 8.9% in the same period but experienced 7.7% more search activity on the for-lease side of our platform.
  • In for-lease searches, Houston lost some tenant attention, while Chicago activity jumped an exciting 14.5% in July. 

Highest Asking Price by MSA — July 2023

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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