Estimating the Size of the Commercial Real Estate Market in the U.S.
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The approximated overall dollar value of commercial realty was $20.7 trillion as of 2021: Q2.
Highlights
This research note summarizes a research study by Nareit mostly utilizing data from CoStar that approximates the overall dollar value of commercial property was $20.7 trillion since 2021: Q2. This research study updates and builds on the methodology for Nareit's previous quotes of the business realty market.
Table 1 summarizes the estimates by residential or commercial property sector. The overall estimate is $20.7 trillion. Measurement issues with the underlying data recommend that the real worth of total CRE might differ from this point estimate. An assessment of these sources of uncertainty recommends that the real worth is highly most likely to fall within a range of $18 - $22 trillion. These estimates are based upon a bottom-up technique utilizing the finest readily available information for each residential or commercial property sector.
We likewise estimate total REIT holdings of business real estate utilizing information from Pro. For the second quarter of 2021, REITs make up an approximated 9.4% of the overall CRE market. REITs tend to focus on institutional-quality residential or commercial properties that are newer and of higher quality than lots of other commercial residential or commercial properties that are owned by personal financiers. We approximate the total worth of these "REIT-like" residential or commercial properties to be roughly 50% of the total CRE market which the REIT share of "REIT-like" residential or commercial properties is 18.7% for the 2nd quarter of 2021.
Chart 1 shows a time series of the REIT share of the overall CRE market and the REIT share of the REIT-like CRE market.
Methodology
To estimate the size of the business property market, we utilize a multi-step technique based on the best readily available data for each residential or commercial property sector.
- We begin by recognizing and estimating the variety of units (for multifamily) and overall square footage (for other residential or commercial property sectors) by residential or commercial property sector and residential or commercial property quality type for the biggest 200 markets in the U.S. This procedure used CoStar's data export function covering the Office, Retail, Multifamily, and Industrial residential or commercial property sectors that supplied overall square video and systems as well as the average cost per square foot (for workplace, retail, and commercial) or per system (for multifamily).
- The information on square footage and average rate by residential or commercial property type (for retail: General Retail, Mall, Neighborhood Center, and Strip Center