Commercial real estate pricing recovered fairly quickly through May, given the slow pace of job growth.
The percentage of commercial properties selling at distressed prices in May was lower than it has been since mid-2009, according to a report from the CoStar Group. Researchers say that the combination of increasing multifamily occupancy levels and rents has reduced total distressed trading and boosted pricing in the sector as a whole. The improvement had some effect across all size and quality categories.
Demand for smaller and lower-quality commercial real estate properties has grown substantially in recent quarters, the report indicates, gaining ground on top-tier and larger properties. At the same time, demand for high-end assets remains strong.
Rental property management companies may find the real estate industry reaching a turning point soon. Many indices tracking home prices are beginning to climb after years of falling, a long-awaited reversal. Inventory has decreased a great deal, largely due to investors buying up distressed homes, the Wall Street Journal notes.
While they may see competition from these investors, the drop in inventory and rising prices mean that such purchases are likely to slow. This could prevent competition from increasing until further rental housing units are built.