The FINANCIAL -- Commercial real estate markets are improving with Realtors specializing in commercial real estate reporting an increase in annual gross income, the number of sales transactions and sales volume, according to the 2015 National Association of Realtors Commercial Member Profile.
The annual study's results represent Realtors, members of NAR, who conduct all or part of their business in commercial sales, leasing, brokerage and development for land, office and industrial space, multifamily and retail buildings, as well as property management.
“After years of slow recovery, the commercial real estate market has shown meaningful growth and our members have seen significant improvements in their business activity,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark. “Realtors who practice commercial real estate help build and revitalize communities by facilitating investment in commercial properties that support millions of jobs nationwide. There is every indication that continued improvement to commercial markets with help stimulate economic growth for the rest of the country.”
The profile shows the median gross annual income of commercial members, which has increased steadily for the past five years, was $126,900 in 2014, an increase from $96,200 in 2013. Appraisers and brokers reported the highest annual gross income while sales agents, often newest to the field, reported the lowest. Sixty-seven percent of Realtors® who specialize in commercial real estate reported they derived 50 percent or more of their income from commercial real estate in 2014.
Commercial members completed a median of 11 sales transactions in 2014, up from last year’s median of eight. Six percent reported no sales transactions, down from 9 percent in 2013. The 2014 median sales transaction volume for members who had a Sales transaction was $2,916,700 - a significant increase from $2,554,700 in 2013.
Fifty-nine percent of commercial members are brokers. Licensed sales agents, at 24 percent, represented the next largest segment. A majority of commercial members reported working for a local firm, and 82 percent reported working at least 40 hours a week.
Thirty-two percent of commercial members were involved in international transactions in 2014. Eighteen percent saw an increase in international clients and only 1 percent had a decrease. Broker associates had the most experience with foreign clients with 43 percent reporting an international transaction.
Eighty-three percent of commercial members reported having a leasing transaction. The median transaction leasing volume for members who reported at least one transaction was $500,000 in 2014 – a more than 15 percent increase from 2013. The median dollar value for leasing transactions is heavily influenced by the member’s experience level.
“When it comes to leasing transactions, the report tells us that the more years of experience an agent or broker has the more high value transactions in which they are involved,” said Lawrence Yun, NAR chief economist. “The broad improving leasing trend will continue this year and next because of rising occupancy rates across all commercial property types.”
Commercial members who manage properties typically managed 75,000 total square feet, which represents 20 total spaces. Those who manage offices typically managed 25,000 total square feet, representing eight total offices.
The typical commercial member has been in real estate for 25 years and in commercial real estate for 20 years. The median length of membership in NAR is also 20 years. Additionally, 45 percent of commercial members are also affiliated with one of several commercial organizations including the CCIM Institute, the Institute of Real Estate Management, the Counselors of Real Estate, the Realtors® Land Institute and the Society of Industrial and Office Realtors.
Commercial members are predominately male with a median age of 60. However, more women continue to enter the profession, as 51 percent of those with two years or less experience are female Seventy percent of Realtors® who specialize in commercial real estate have an education level of a bachelors’ degree or higher. Seventy-eight percent of commercial Realtors® are married, with 13 percent being divorced, and five percent being single and never married.
The 2015 NAR Commercial Member Profile was based on a survey of 1,982 members. Income and transaction data are for 2014, while other data represent member characteristics in 2015. Approximately 350,000 commercial real estate professionals are members of NAR, making it the largest commercial organization in the industry.