REALTORS® specializing in commercial real estate experienced a slowdown in sales transaction volume in 2008, but also reported an increase in commercial leasing volume, according to the 2009 National Association of REALTORS® Commercial Member Profile.
The study's results represent REALTORS® who practice commercial real estate, a group that comprises more than 81,000 of NAR's 1.2 million members. The survey shows that the median sales volume in 2008 was down nearly 10 percent since 2006, resulting in a 13.6 percent decline in median income. However; the results also showed a 33-percent increase in commercial leasing volume during the same two-year period.
REALTORS® Commercial Alliance Committee Chair Robert Toothaker said that, despite the fact that commercial real estate activity has suffered, the typical NAR commercial member was doing slightly better than might be expected. Because most of our members are involved in transactions of under $5 million, the decline in business was not quite as sharp as the drop in investment-grade transactions, he said. The flow of funds from regional banks hasn't slowed as dramatically, leaving some credit available for commercial transactions; however, credit has tightened further in 2009, and continues to curtail commercial real estate lending activity. NAR continues to advocate on behalf of its commercial members to increase liquidity to commercial real estate and ensure overall economic recovery.
The median number of transactions for REALTORS® practicing commercial real estate in 2008 was eight, unchanged from 2006. Transaction volume for commercial members was $2,024,900 in 2008, down from $2,248,700 in 2006. Sixty-five percent reported a volume greater than $1 million; and nearly a quarter had a transaction volume of $50 million or more in 2008. Leasing volume for commercial members in 2008 was $244,300, slightly higher than the $183,600 reported in 2006.
The median income in 2008 was $99,900, down from $115,600 in 2006. Brokers earned a median of $129,500, while sales agents earned $70,100. Commercial members in the business for two years or less earned a median of $30,200, while those with three to five years of experience earned $63,700. For six to 15 years, the median was $94,700, while members in the business for 16 years or more earned $147,700.
The median dollar value of sales transactions in 2008 was $544,100. The amount was slightly higher among brokers ($629,500) compared to sales agents ($423,500); and varies with experience - those with less than two years experience had a typical sales transaction value of $181,800, well below the $689,900 among those with 16 to 25 years experience. The median square footage of sales transaction in 2008 was 14,000.
Leasing dollar value for commercial members was typically $128,900 in 2008. Commercial members with fewer than two years experience had a typical leasing dollar value of $64,200; those with 16 to 25 years experience had a typical transaction value of $213,200. The median square footage of leasing transactions in 2008 was 4,300.
Most commercial members are compensated on some sort of commission basis. Forty-five percent of commercial members are compensated through a split commission arrangement, 33 percent receive all of the commission, and another 9 percent receive a salary plus a share of the profits.
Three-quarters of NAR's commercial members bring in 50 percent or more of their annual income from real estate. Income from leasing activity falls well below income from sales. In 2008, 49 percent of commercial members said they received half to all of their income from commercial sales; 19 percent indicated none of their annual income came from commercial sales. Income from leasing was far less, only 24 percent earned half to all of their income from leasing commercial property in 2008; 28 percent earned none of their annual income from leasing.
Fifty-six percent of commercial members said none of their income came from personal commercial real estate investments; only 8 percent made half or more of their income from their personal investment in commercial real estate.