NEW YORK CITY- The commercial real estate sector continued its healthy rebound in 2013, as illustrated by one of the largest office transactions of the year: the $1.3-billion sale of 650 Madison Ave. in New York City last fall. New York claimed the lowest office vacancy in the country at an estimated 9.8% in the fourth quarter, according to Reis, and continues to have positive momentum in the new year.

“With New York City experiencing a record year in 2013 in several sectors, the fundamentals of this US-based global marketplace are expected to remain strong in 2014,” says Wayne D’Amico, CCIM, president of Wayne D’Amico & Co. and senior advisor with Lance Capital LLC in New York. “With the exception of an occasional and modest rearing by some experts over the potential for a bubble, the market is poised for continued growth into the foreseeable future.”

On a national basis, the last quarter of ‘13 also set the pace and tone for commercial real estate investment growth in the year ahead around the country. Nearly 50% of the Chicago-based CCIM Institute‘s national membership indicated they experienced more transactions in 4Q13 than the same period the prior year, according to the organization’s 4Q13 Quarterly Market Trends report.

The report, which features data collected from CCIM members nationwide and is conducted in conjunction with the National Association of Realtors, also shows that 61% of member respondents received more serious inquiries related to buying commercial real estate. Property sectors that saw the most deal activity included:

  • Hospitality: 75% of CCIM’s saw an increase in deals with hospitality properties
  • Office: 64% of CCIM’s saw greater deal flow in the office sector
  • Industrial and Multifamily: 56% of members who work with industrial and apartment properties saw a rise in deals
  • Retail: 51% of CCIM’s in the retail sector saw an increased deal volume

“With triple-digit spreads between capitalization rates and Treasury notes providing a large cushion, investors’ risk appetite broadened, driving commercial investments to a strong finish in ‘13,” says George Ratiu, director of quantitative and commercial research for NAR and research director for the Quarterly Market Trends report. “With a favorable economic outlook coupled with rising capital availability, commercial real estate markets are well-positioned for continued growth in ‘14.”

Higher rents were also reported with 48% of CCIMs indicating they are observing higher rental rates across all property types over the same period last year, and 35% of members experienced similar rents year over year. Almost half (45%) of respondents expect rents and prices to move together in the next one to three years, with 23% predicting rent growth will outpace price growth and 32% indicating the opposite, with prices expected to outperform rents.

The complete report findings are available by clicking here.