How Big Is the Commercial Real Estate Market in the U.S.?
At 97 billion square feet and counting, the commercial real estate market in the U.S. is booming. How big is this industry and how do CRE professionals and potential investors figure out which properties to invest in? Read our recent blog to learn the answer.
Commercial real estate is an industry that many are interested in investing in due to the potential for high rates of return and exciting possibilities. But exactly how big is the U.S. commercial real estate market? Due to the COVID-19 pandemic, the U.S. commercial real estate market size took a toll in 2020, coming in at 280 billion U.S. dollars. This was down from approximately 405 billion U.S. dollars in 2019. But sales volume is just one way to size the industry–and it’s only measuring the properties that exchanged hands.
Another question that sheds some light on the size of the CRE market is, “How much commercial real estate is in the U.S.?” The Commercial Buildings Energy Consumption Survey (CBECS) by the U.S. Energy Information Administration estimates that as of 2018, the last year this survey was conducted, there were 5.9 million U.S. commercial buildings, containing a total of 97 billion square feet. The number of commercial buildings increased by 6% and floorspace by 11% since the CBECS was conducted previously in 2012.
Yet another potential measurement of the CRE industry is how many properties are on the market at this moment in time. Finding the answer to this question has historically been a difficult process, due in part to the fact that there are few centralized sources for this data. Those sources that do exist have a variety of collection methods—so data is often inaccurate—and they are not updated frequently. So how does one find out what commercial real estate is in their area? We’ll answer that in just a moment.
What Are the 4 Main Categories of Commercial Real Estate?
Commercial real estate is typically broken down into four categories:
- Industrial – Warehouse and storage facilities account for 17% of the commercial real estate buildings in the United States. This category of CRE includes buildings that are used for manufacturing, assembly, production, warehousing, research, storage, and distribution.
- Retail – When thinking about CRE, many people automatically picture retail spaces like big box stores. In reality, retail only accounts for 9% of the buildings in the CRE industry.
- Office – Office buildings account for 16% of CRE and are a common CRE investment due to the profitability.
- Multifamily – Apartment buildings with many units are considered commercial real estate because of the revenue generated by the tenants.
Within each of these categories, particularly office buildings, there are additional classifications. A Class A building is a newer piece of property with modern aesthetics, quality construction, and a prime location. These buildings are the most expensive to purchase and to rent. Class B buildings are typically older, may need to be spruced up, and are in slightly less desirable locations. Class C buildings are usually over 20 years of age, may need significant restoration and maintenance, and are traditionally located in less attractive areas.
What Is the Best Way To Perform Commercial Real Estate Market Analysis?
When looking for CRE properties to invest in, where do you go to find what the market is? At Canyon Data, we found that through our years of industry experience and research that 40-50% of all available CRE data is inaccurate. We are passionate about solving this problem and bringing a new approach to finding, verifying, and providing up-to-date CRE data. Canyon Data’s proprietary collection process provides stakeholders with a continuously-updated dataset for all commercial real estate in an easy to use platform. Our process includes:
- A team of local researchers who scrape every publicly available data source about the area. After collecting this information, they pass it along to be verified and physically validated.
- Constant verification by certified experts who match data across sources and make sure that the data matches reality.
- Cutting-edge technology like robotics and artificial intelligence.
- Regular monthly updates so that our users and partners have the most current information available.
Consider the possibilities of having demographics, business listings, traffic maps, and up-to-date building approvals alongside accurate occupancy data and rental rates at your fingertips. With Canyon Data, that possibility is a reality. Our process and approach is currently being tested in the Boise, Idaho CRE market—and we’re on a mission to bring these valuable insights to the entire U.S. commercial real estate market.
What is the commercial real estate outlook for the next 5 years?
In the first three quarters of 2021, the CRE market began to rebound from the effects of the COVID-19 pandemic, exceeding both 2020 and 2021 volumes and reaching a total of 494 billion U.S. dollars. This is great news for CRE professionals. As for the future of the industry, the real opportunity for growth lies in the ability to harness technology and human collaboration. CRE professionals in Boise and the greater United States are already doing incredible work, and augmenting their efforts with clean, actionable data has transformational potential. At Canyon Data, we know it’s not possible to predict the future, but we also know that verified data that is updated monthly will empower and enable CRE professionals through the next five years and beyond. We invite you to subscribe to experience the future of the CRE market, today.