Commercial Real Estate Index
energy, it will not likely provide enough fizz to
make everyone’s celebration cups full.
SIOR Index Results
Against this economic backdrop, office and
industrial spaces found a plateau. The third
quarter SIOR survey results reflected an uncertain economy.
The Commercial Real Estate Index, representing third quarter 2011 data, was virtually
unchanged, having inched up 0.6 points. The
national index, based on 10 variables pertinent
to the performance of U.S. industrial and office
markets, rose slightly to 55. 5 from 54. 9 in the
second quarter. The office sector declined 1. 5
points from an index value of 53. 2 to 51. 7. In
contrast, the industrial sectors rose 1. 6 points to
57. 9. Looking at most indicators, office space
experienced a comparatively more difficult
quarter. As of the third quarter, the national economic conditions are taking an increasing toll on
local industrial and office markets.
SIOR Commercial Markets
The broad markets were almost flat, in step
with the macroeconomic trends. Geographically,
all four regions avoided a decline. Commercial
markets in the Northeast posted the largest
advance during the third quarter— 2. 8 points to
an index value of 58. 9. Markets in the Midwest
were slightly positive as well, gaining 1. 2 points.
Markets in the West and South were virtually
unchanged from the previous quarter. In terms
of nominal index value, the South continues to
register the best overall market conditions.
Leasing activity was flat in the third quarter,
as practitioners reported unchanged vacancies.
While concessions continue to make it a tenant’s
market, respondents found improving rents— 67
percent felt they were below last year’s level. In
addition, subleasing availability is registering
minor improvements, with only 36 percent of
SIORs reporting ample sublease space.
Construction of new commercial space is
showing signs of life in certain regions, but
remains at historically low levels—74 percent
of practitioners mentioned there was no new
construction in their market. Development conditions remained level, favoring buyers, with
acquisition prices lower than construction costs
in 83 percent of the markets. While selected
local economies witnessed improvements in
the third quarter, national economic conditions
worsened. According to 92 percent of SIORs,
