4 Forces in the Economy that have Impacted Commercial Real Estate Properties

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April 13, 2015 by svn southland commercial team 2 comments

This post originally appeared on tBL member SVN Southland Commercial’s blog SVN Southland Commercial Blog and is republished with permission.

Continued momentum in the national economy and job market helped propel widespread pricing gains of commercial real estate in 2014. Unemployment levels are finally beginning to return to normal levels following the financial crisis of 2008. The following list explains the four forces in the economy that are helping commercial real estate properties:

  1. Decreased Vacancies

The decreasing unemployment levels and job growth has led to positive absorption and helped to decrease vacancy of office, retail, industrial, and hospitality properties. This net absorption is leading to rent growth and price appreciation across all sectors.

  1. Increased Investing in Commercial Real Estate Properties

Investors of all types, from high net-worth individuals to private equity to institutional investors, have taken notice of the decreasing vacancies. In addition, 2014 saw a large influx of foreign investors to the market place looking to place capital in commercial real estate assets. Turmoil across the globe including in the Middle East and Eastern Europe has once again shown that the United States is still seen as the most politically and economically stable in the world.

  1. Increased Prices

The increased demand to invest, coupled with near-historically low interest rates, has been felt in primary markets and Class A properties. It has also driven the prices up to a point where many investors have targeted Class B and Class C properties in secondary and even tertiary markets seeking higher yields.

  1. Increased Demand of new Commercial Real Estate Properties

Amid this increased demand very little new supply of office, retail, and hospitality properties have come out of the ground while there has been only a moderate new supply in industrial development. The only property sector seeing new supply of any significance would be multi-family, but most experts believe that even that new supply will not be enough to keep up with demand.

All of these market forces resulted in significant pricing gains across all types of commercial real estate properties, all classes of commercial real estate properties, and in all regions in 2014. Barring any unforeseen major events, most experts believe that this momentum will carry over into 2015 and beyond.

For more details on this topic, I would suggest reading For Commercial Real Estate Price Growth, It Was a Very Good Year, recently posted by CoStar.




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I am a successful Commercial / Investment Real Estate Broker in Arizona now for 20 years.  I am also a commercial land specialist in Phoenix and a Landspecialist in Arizona. If you have any questions about Commercial / Investment Properties in Phoenix or Commercial /  Investment Properties in Arizona,  I will gladly sit down with you and share my expertise and my professional opinion with you. I am also in this to make money therefore it will be a win-win situation for all of us. 

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