“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.
Buzz: Talk about a winning hand. Last year, all 11 slices of one commercial real estate index posted gains — and 10 niches had double-digit increases.
Source: Green Street’s Commercial Property Price Index tracks values of large, “institutional quality” income-producing real estate across the nation.
The Trend
As the economy adjusted to life in the pandemic era, a buying binge for commercial property made the task of separating the industry’s winners and losers a study in the size of appreciation rates.
It may have been a tough year for landlords, operationally speaking. But property owners were rewarded, at a minimum, with appreciation — that’s the increase in asset values — whether tenants were consumers or corporations.
Commercial property values in all segments tracked by Green Street rose 24% last year to a record high — a sweet U-turn from an 8% drop in the nine months of 2020 following the coronavirus outbreak.
Why? Heavy demand for space slashed vacancies in many real estate niches. As a result, rents jumped, whether the properties housed people or goods. And investors wanted to get into the game.
So, in yet another of the pandemic era’s odd real estate twists, the 2021 price rebound put Green Street’s all-property benchmark up 14% since COVID-19 smacked the economy.
