In a sign of the times, commercial market prices are rising, but units are not.
According to the National Association of REALTORS® (NAR) 2018 Commercial Member Profile, on commercial REALTORS®, income and sales volume have tracked up, but deals have been on a downtrend. The annual average number of transactions tumbled to seven in 2017, from eight in 2016; earnings, however, reached a record $150,700. Meanwhile, the median sales volume was $3.87 million—a jump from $3.5 million.
The commercial market outlook is stable through 2019, thanks to an economy on a robust run, according to a forecast at NAR’s REALTORS® Conference & Expo, held this month. In the last eight years, prices ran up 93 percent—growth that, in all likelihood, will moderate over the next two or three years, the forecast showed.
“The commercial real estate industry is strong and is on pace with the growing economy,” explains NAR President John Smaby. “Although there is a slight decrease in transactions, commercial professionals have reported improvements in their markets and business activity for consecutive years. REALTORS® reported that sales volume and costs of sales increased this year, as well as median gross annual income.”
“Commercial real estate professionals are reporting great growth in the past year, which has convinced more and more members to enter the commercial industry,” notes Lawrence Yun, chief economist at NAR. “The economy expanding, along with [the] tight labor market, have boosted income for REALTORS® in the commercial space.”
Commercial is paralleling the residential side, albeit with higher stakes. RISMedia’s 2018 Power Broker Report, which is based on residential sales volume and transactions, found that while both sales volume and transactions trended up in 2017, deals lagged sales significantly.
The imbalance is indicative of the inventory shortage, which is only now slightly unwinding, as well as the fact that more are entering the profession.
According to the Commercial Member Profile, brokers and broker associates had the highest incomes, at $186,900 and $139,700, respectively. Agent incomes trailed, at $104,600, but increased, still, from 2016. Those with less than two years of experience earned $44,000—a leap from $31,500 in 2016—and those with more than 26 years in the industry made $192,600, up from $162,200.
For more information, please visit www.nar.realtor.