Commercial real estate experienced a slowdown in the first quarter of 2016, according to the latest "Commercial Real Estate Outlook," published by the National Association of Realtors in May 2016. Compared to 2015, the first quarter of 2016 saw a 20 percent decrease in commercial sales volume in large commercial real estate (LCRE) markets. However, sales volume in small commercial real estate (SCRE) markets increased by 8 percent over the same period.
Looking toward the second quarter of 2016 and beyond, commercial fundamentals continue to grow in three of the four core sectors. Vacancies are expected to decline in a number of key sectors, including commercial, retail, and industrial. Commercial multifamily may experience an increase in vacancies over the next two years, likely due to the appearance of new supply in the market.
In terms of investment, interest rate hikes will continue to slow down sales in LCRE markets. High interest rates and increased regulatory activity have also restricted access to capital in SCRE markets. Nevertheless, commercial real estate in the United States will remain an attractive alternative investment in 2016.
