NAR: Commercial Real Estate Index Hits Record High
			A forward-looking index for the commercial real estate market recorded its ninth consecutive improvement in the second quarter, according to the NATIONAL ASSOCIATION OF REALTORS®.
				The Commercial Leading Indicator for Brokerage Activity rose 0.5 percent to an index of 120.7 in the second quarter, the highest on record, from a downwardly revised reading of 120.1 in the first quarter. It is 1.1 percent higher than the second quarter of 2006 when it stood at 119.7. NAR’s track of the index dates back to 1990. Lawrence Yun, NAR senior economist, says the commercial sectors are benefiting most from rises in industrial production, shipments of durable goods, and wholesale trade. “Despite some signs of slower overall economic expansion, the rise in the index means net absorption of space in the industrial and office sectors is likely to expand over the next six to nine months,” he says. “In addition, an improvement in returns on investment implies healthy rent increases for commercial property owners.” Positive movements in the index components more than offset a fall in the National Association of Real Estate Investment Trusts price index. The net gain in NAR’s index also indicates modestly higher completions of overall office, warehouse, retail, and lodging structures. What You Can Expect “In short, the latest data suggests improved business opportunities for commercial real estate practitioners in the months ahead,” Yun says. Net absorption in the office and industrial sectors in the fourth quarter of 2007 is expected to be 30 million to 40 million square feet, with about $365 billion to $375 billion in new completed commercial construction activity. That is compared to $343 billion of new construction reported in the second quarter of this year. The rise in the commercial leading indicator also implies that commercial real estate practitioners could expect leasing and sales activity in the fourth quarter of this year to be about 1.1 percent higher than the fourth quarter of 2006. More than 120,000 NAR members offer commercial services, and 68,000 of those are currently members of the REALTORS® Commercial Alliance, NAR’s commercial division. The commercial leading index is a tool to assess market behavior in the major commercial real estate sectors. The index incorporates 13 variables that reflect future commercial real estate activity. — REALTOR® Magazine Online