The economic impact of the COVID-19 pandemic was still evident in the South Coast commercial real estate market in Q1, with virtually all indicators diminished compared to pre-pandemic levels. However, as the spring progresses, our brokers report a noticeable growth in activity and are cautiously optimistic that Q1 will prove to be the last stagnant quarter of the current cycle.
Here are some summary points on Q1:
- Transaction value decreased 42% for sales and 30% for lease consideration, compared to Q1 5-year averages.
- Off-market sales and purchases by owner-users both dropped substantially, perhaps indicating “pandemic fatigue” in demand•Lease transactions and gross absorption decreased 25% and 44% respectively compared to Q1 5-year averages.
- The available inventory of 263 spaces for lease is the largest on record.
- On the positive side, deal velocity picked up later in the quarter—combined transaction value grew from $15M in January to $55M in March—and has continued to advance so far in Q2.
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