SIOR Commercial Real Estate Index, compiled by the Society of Industrial
and Office Realtors (SIOR) in association with the National Association of
Realtors (NAR), indicated that commercial real estate markets have not yet
begun their rebound to market equilibrium. The national Index, which
measures 10 variables pertinent to the performance of U.S. industrial and
office markets, dropped fo
r a sixth straight quarter to an overall total of76.4 points. This point drop placed it 23.6 points below the 100 point
criteria that represents a balanced office and industrial marketplace and
43 points below its record high in spring 2006.
The SIOR Commercial Real Estate Index is a diffusion index (see
Methodology) where a score of 100 indicates markets in balance. A score of
76.4 reflects conditions that are significantly less favorable for
landlords and sellers, but excellent for tenants and purchasers.
SIOR commercial real estate professionals provided their views on
second quarter 2008 market conditions in their respective markets in a July
survey.
An unprecedented number of SIOR members -- 83 percent -- report that
their local markets are feeling the impact of the decline in the national
economy. This number is 59 percent higher than just one year ago. Leasing
activity is down according to 75 percent of respondents. Concessions
benefiting tenants are riding above normal and have increased 29 percent
from the same quarter one year ago. Twenty-three percent of respondents
indicated that there was virtually no new construction going on in their
marketplace and according to 67 percent of respondents construction in
general is down. Concerns about where the economy is heading are clearly
impacting commercial real estate business -- and will continue to do so as
50 percent of respondents predict a 1-15 percent decline in activity for
3rd quarter 2008.
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