Crexi National Commercial Real Estate Report: September 2022

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Welcome to the September 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 September, 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.

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

Overall asking prices rose modestly in September, despite market uncertainty.

Closing out the third quarter of the year, amid shifting economic conditions, asking prices on Crexi rose a modest 2.2% in September. The same period saw cap rates compress to below 6% for the first time since June, indicating a rise in demand overall in the commercial real estate sector. Buyers could be clamoring to get ahead of the Fed’s projected interest rate hike towards the end of this year, or taking advantage of the 1031’s tax benefits (we saw searches for “1031” on Crexi more than double in September). At the same time, capital is looking to the real estate sector as a buffer against inflation to procure a historically more secure investment amid volatile market conditions.

We’ll continue to watch rising valuations against completed transactions headed into the fourth quarter. Transaction speed has generally slowed due to a growing bid-ask gap of sellers wanting yesterday’s valuations and buyers looking for today’s pricing. We observed higher numbers of unpriced listings in September across asset classes, which we’ll explore in more detail below. 

Industrial saw the highest gains, but an increasing number of listings without a price tag.

On Crexi, industrial properties reported the most noticeable pricing gains in September, up 5.4% in price per square foot from the previous month. Interestingly, the number of unpriced listings experienced a notable jump, with 20% of new assets added last month listed without a price tag. 

This increase in unpriced listings corresponds with sellers’ awareness of industrial’s continued success while accepting how changing market conditions’ are impacting buyer sentiment. Brokers may think moving the pricing conversation later in negotiations can better help navigate deals to the finish line, which it can in many cases.

Industrial was also only one of two asset types to post higher leasing rates month-over-month in September, with average monthly rates per square foot rising shy of 2%. While occupancy rates showed little change, the need for manufacturing and logistics space will likely drive tenant demand higher, heading into the following season.

Offices show fluctuating signs of adjustment and recovery, bucking doom-and-gloom predictions.

The average asking price per square foot growth for offices outpaced all asset classes except industrial in September, posting a modest 1.82% increase compared to August. While the change is modest, this data coincided with a promising 5% increase in occupancy rates, as businesses continued to absorb space to fit their flexible office needs. 

Office recovery is slow-going, but many of these indicators point to long-term potential for gains in the sector, as does a consistent average leasing rate of $1.34 per month per square foot over the last three months. The need for in-person accommodation at the office has proven itself, and while acquisition may be slow-going, it’s not out.

September produced a surge of new for-lease assets, with slight corrections in asking rates per type.

Overall leasing rates slowed their growth following a 3% jump in August. Industrial and special purpose property (up 4.3%) were the only two asset types to post rate gains, while retail and office saw a mild 2.3% decline. These changes occurred alongside a significant 24% increase in new inventory added to Crexi in September, with increased supply potentially contributing to adjusted asking rates to attract demand. 

Search activity rebounded with a vengeance in September, with major Sunbelt metros posting impressive gains.

Search activity shot up across Crexi’s sales and leasing platform, particularly in major metros in the South and Sunbelt. These searches likely coincided with a desire to finalize transactions ahead of rate gains and end-of-year reports, as mentioned above, and a desire to acquire space in these consistently well-performing regions. 

Houston, ever the favorite, saw a 29.4% increase in for-sale searches and another 30% gain in tenants seeking space in September. Dallas and San Antonio saw 28% and 29% more search activity in their for-sale markets, while Miami‘s lease searches rose another 29% compared to August’s performance.

Highest Average Asking Price per Square Foot By City — September 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
Crexi Insights

Marketing Team at Crexi

Crexi makes CRE easy by consolidating the entire commercial real estate process into a single ecosystem.

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