Welcome to our October installment of the Crexi Trends monthly report. In this month’s data feature, we explore Crexi’s database to tease out relevant data, patterns, and insights from the previous month with an eye towards the future.
The October report covers monthly trends observed in listings added to Crexi’s marketplace in October, focusing on average prices per square foot, cap rates, and other notable metrics. With this data in hand, we seek to equip investors, tenants, and brokers alike with actionable insights to make well-informed commercial real estate decisions.
Average Asking Price per Square Foot and Changes Month-over-Month
Office and retail properties for sale see small growth, while leases rates decrease following September gains.
We observed a 1.27% increase in asking prices per square foot for office property types from September to October. While this growth is promising, it represents the lowest monthly increase for the sector since July, indicating a slight decrease in momentum due to recent spikes in COVID-19 cases and a return of many regions to springtime levels of closure. On the leasing side, rates for new office spaces added in October decreased by 4.1% from the previous month, almost (but not entirely) zeroing out September’s office leasing gains.
Retail properties saw similar, slowed growth from September to October. Following significant gains in September for the retail sector, October’s average asking price for new retail properties rose only 1.54%. Retail spaces for lease added in October saw a decline of average asking rates per square foot by 0.78%, while new restaurant properties for lease, in particular, saw their asking rates drop 5.62%.
Land continues to climb across sales and lease as more vacant deals get cross-listed.
Following a mid-September change in Crexi’s property type categorization process, land continues to climb in both asking prices and rates well into October. Land properties for sale saw a 20.59% jump in average asking prices at the start of Q4 2020, while the average asking rate for leased land jumped 21.6%.
While we can attribute some of this growth to the addition of cross-listed property types, such as land zoned for retail development, land’s gains also point to an increase in vacant properties with potential for drive-thru, hospitality, and flex office use.
Multifamily sees big gains in sales properties, while average square footage drops.
Multifamily properties for sale added in October saw an 8.32% increase in the average asking price per square foot, making significant recoveries from declines in Q3. Interestingly, the average square footage of multifamily assets saw a significant drop alongside a more modest 3% decline in occupancy rates.
This is possibly due to a rise in single family units with accessory dwelling units (ADUs) listed on Crexi or an increase in smaller complexes being listed as people move out. The amount of unpriced multifamily listings also jumped by 12.72% from September to October, indicating a shifting seller preference to let market conditions determine their properties’ value.
Following a record-breaking 50% increase in September, the number of newly listed restaurants continues to rise.
October saw a record amount of new restaurant properties added on both the sales and leasing side since we started measuring the subtype in detail. Total restaurants on Crexi jumped by 112.6% compared to the same time in Q3, following a 57% increase in September and a 31% jump in August. This reflects landlords’ desire to shed nonperforming assets, particularly as these restaurants brace for cooler weather that restricts outdoor dining and continue to follow COVID-related caps on indoor patrons.
For newly listed restaurant spaces for lease, we observed a 5.62% decline in average asking rates, along with a significant drop in average rentable square footage, as smaller and possibly less appealing units joined the market.
Highest Average Asking Price per Square Foot By State — October 2020
Disclaimer: The information in this article is based on Crexi’s internal marketplace data and additional external sources. While asking price in many ways is a reflection of 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.