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Spurred by Employment Gains, SIOR Index Closes 2016 at Highest Level on Record

Market Trends & Analysis Industrial Office

Members of the Society of Industrial and Office REALTORS® (SIOR) participated in the Commercial Real Estate Index survey, supplying their knowledge of the industrial and office market conditions in the United States for the fourth quarter of 2016. The responses, given by 240 SIOR members, compiled by SIOR in association with the National Association of REALTORS® (NAR), present an accurate depiction of the current industry for the end of 2016.

The SIOR Index increased 4.2 points during the 4th quarter of 2016, moving from 119.0 to 123.2., keeping the Index value above the 100-point threshold for the 11th consecutive quarter. The index was 0.3 percent higher on a yearly basis. The SIOR Index measures ten variables pertinent to the performance of U.S. industrial and office markets (see methodology).

Leasing activity exceeded historical levels, 54 percent of respondents felt that leasing activity in their market is higher than historic levels; 26 percent found leasing in line with averages, while 20 percent found leasing below normal.

Rents rose for office and industrial properties—74 percent ascertained that rents were above historical trends. Meanwhile, 24 percent indicated that rents were in line with long-term averages, and 6 percent of SIOR members considered that asking rents were below those of one year ago.

Vacancies continued declining, with 70 percent of respondents reporting lower availability rates compared to 71 percent last quarter; 12 percent of respondents thought that vacancy rates are higher than a year ago, and 17 percent contend they are the same.

Subleasing availability declined, with only 8 percent of SIOR respondents feeling that there was ample sublease space in their markets, compared with 9 percent last quarter; 62 percent considered subleasing to have a small influence on the market.

In terms of tenant concessions—19 percent felt that tenants were benefiting from moderate concessions to deep discounts to rents (23 percent last quarter); 34 percent of respondents found a market in normal negotiating balance; 47 percent thought the market favored the landlord.

New construction of office and industrial spaces moved sideways, with 35 percent of SIOR members reporting new construction during the quarter, and 19 percent indicating new building development close to historical averages; 28 percent of respondents indicated levels lower than normal, and 17 percent mentioned that there is no new commercial construction in their market.

Development conditions continued shifting in favor of sellers during the period, with 53 percent of SIORs rating it a seller’s market. Investment prices increased slightly, with 43 percent of respondents indicating prices were above construction costs.

On the investment side, prices were below replacement costs in 38 percent of the markets, compared with 39 percent last quarter; prices were above costs in 43 percent of the markets.

Local economies performed well during the quarter, with 58 percent of SIOR respondents indicating that their local economies were strong and improving. Only 9 percent of SIOR members felt that their local economy was slowing or contracting. The fourth quarter national economic performance trickled down into the local markets, with 55 percent of SIOR responses indicating a positive impact upon markets. In contrast, only 7 percent of SIOR respondents experienced a negative impact upon their markets from national economic conditions (the remainder was neutral).

Regionally, the survey respondents pointed to solid performance across all four regions. The West and Northeast posted the highest quarterly gains—7.5 points and 7.4 points respectively. The West also recorded the strongest yearly advance, with a 2.5-point gain. The South region remained in the top, with the highest index value—129.3. The Midwest kept a solid pace of growth, with the index advancing 2.0 points year-over-year, at a quarterly value of 123.9.

Looking ahead at the first quarter of 2017, the majority of SIOR members expect the outlook to improve—72 percent of respondents indicated growth in the 1-15 percent range (compared with 56 percent in the prior quarter), while 22 percent felt the market will maintain current levels. Only 6 percent of SIOR members expected conditions to decline.


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The Society of Industrial and Office Realtors® (SIOR) represents the world’s elite in industrial and office brokerage. SIORs are held to the highest standard by completing thorough requirements and adhering to the SIOR Code of Ethics. SIOR is more than a designation, it’s a symbol of excellence. SIORs value the power that comes with building relationships and sharing ideas that are on the leading edge of the industry. They are the most knowledgeable, experienced, ethical, and successful commercial real estate brokerage specialists. For more information, visit