Volume 7, Number 1
Review of Commercial Sales Activity During 2017
For calendar year 2017, the sale of 108 commercial properties was an increase of 42% from the 76 during 2016 and 25% higher than the 2015 total of 86. The record high occurred in 2003 with 120 sales and the low of 36 came in 2008.
The $1,181,698 Average Sale Price (ASP) was 10% higher than the $1,072,163 for last year and 11% above $1,060,362 in 2015. The highest ASP for the last 16 years was $2.754M which occurred in 2005. The lowest was $584M in 2000.
The Dollar Value of Sales rose 57% to $127,623,392, due to the 42% increase in sales and 10% increase in ASP, as it was $81,484,422 in 2016 and $91,200,000 in 2015. During the past 15 years, the highest was $289M in 2005. The lowest, $31M, occurred in 2009.
The Sale Price-to-Original List Price (SP/OLP) rose 6% to 87.18% from 82.51% a year earlier and 84.20% in 2015. (The SP/OLP compares the sale price of the property to the list price of the property at the time it first came on the market versus the list price at the time the contract was written, and provides a measure of the mismatch between many sellers’ initial list price and the market price acceptable to buyers.)
The Sale Price-to-Final List Price (SP/FLP) increased 7% to 91.97% from 85.76% last year and 88.84% in 2015. (The SP/FLP compares the sale price of the property to the list price of the property at the time the contract was written instead of the time the property was first listed, and reflects the average percentage of the final listed price that buyers are paying for properties that have sold.)
The margin between the SP/OLP (87.18%) and SP/FLP (91.97%) is 4.7%, which indicates, on average, a seller can anticipate price reductions during the term of the listing of nearly -5% from their Original List Price to the Final List Price prior to receiving a buyer’s offer and the sales price on average will be -8% less than the final list price.
Days On the Market (DOM) decreased -4% to 241 from 251 days last year, and is down -17% from the 292 days in 2015. (This is a measure of the number of days between the date the property was listed and the date the sale closed.)
Listings on Market: The number of listings increased 1% to 153 from 151 in 2016, yet was down -14% from 177 in 2015.
Average List Price dropped -35% to $1,471,922 from $2,275,133 in 2016, which also was down -12% from $1,676,724 in 2015.
Months of Inventory (MOI) declined -29% to 17 months from 24 months during 2016 and 25 months in 2015. (MOI provides a measure of the rate of sales versus the supply of properties and is also known as the “absorption rate.”)
Pending Sales (properties under contract that have various contingencies to complete prior to closing -- usually within the next 30 to 60 days -- provide an indication of the number of additional properties that will close in that time frame) increased by 33% to 16 from 12 in 2016.
Florida Keys Commercial Sales History 2000 through 2017
What follows is a summary of the Florida Keys Commercial Market activity for each of the four major submarket areas during 2017 compared to the commercial sales history from 2000 through 2016 as an ongoing update to the historical perspective of commercial sales. As a reminder, the Upper Keys consists of properties from Lower Matecumbe to Key Largo. The Middle Keys includes properties from the Seven Mile Bridge to Long Key. Lower Keys properties range from Bay Point to Big Pine. Key West properties run from Old Town to Shark Key.
The properties in this report include commercially-zoned land, multi-family residential, hotels, motels, and office space as well as industrial and retail (which includes restaurants) with sales registered in the Keys MLS system. The yellow background denotes the highest number and the salmon background the year with the lowest number for each of the three categories: Total Number of Sales, Average Sales Price, and Total Sales Volume Dollar Value.
The impact of Hurricane Wilma in October 2005 and the downturn in the national economy put the commercial market in a slump, just as those events did for the residential Keys real estate market. The commercial market began recovering in 2010 with increased sales. We don’t anticipate a repeat of that slump due to Hurricane Irma as the factors that led to the conditions following Wilma weren’t present in 2017, and the commercial market since Irma has remained much the same as before its arrival September 10.
Total Number of Sales: The number of commercial sales peaked in 2003 for Key West (72), 2005 for the Middle (29) and Upper Keys (24) and 2006 for the Lower Keys (15). Sales bottomed out for the Lower Keys (1) and Key West (19) in 2008, and in 2009 for the Upper (7) and Middle Keys (4). Key West has achieved 69 sales in 2017, the second-highest on record. The Upper Keys high since the 2009 low was 23 in 2015 and 22 sales were recorded during 2017. The Middle Keys highest sales level since 2009 was 20 during 2015 with 9 sales occurring in 2017. Since 2008 the Lower Keys high was 11 sales in 2012 with lower amounts since, completing 8 during 2017. Total commercial sales also peaked in 2003 with 120, bottomed out at 36 in 2008, with the highest total since – 108 -- occurring in 2017. Not surprisingly, Key West remains the most active market with a historic average from 2000 of 54% of all commercial sales, followed by the Upper Keys with 20%, then 17% for the Middle Keys and 9% for the Lower Keys.
Average Sales Price: The average sales price reached a new high in the Lower Keys in 2017 ($1.95M). The Upper Keys high of ($2.5M) and Key West ($3.0M) occurred in 2005 with the Middle Keys record of ($3.8M) occurring in 2006. Keys-wide, the average sale price increased 10% during 2017 primarily due to the 377% increase in the Lower Keys and a 65% rise in the Upper Keys. The Middle Keys ASP declined -21% followed by Key West with a -11% drop.
Total Sales Dollar Volume: The dollar volume of commercial sales peaked in all areas in 2005 (except for the Lower Keys which hit its high in 2006) when the commercial market had the highest number of sales combined with the record ASP for the Upper Keys and Key West, and the second-highest ASP for the Middle Keys. The Lower Keys Dollar Volume of $21.7M peaked the following year: 2006 was that market’s year for record sales and, at the time, the second-highest ASP for the area. Since 2001, the Key West market area Dollar Volume of Sales (as it has with the total number of sales) accounted for over half of the commercial market with 56%, followed by the Middle Keys with 19%, the Upper Keys at 18%, and 7% for the Lower Keys.
How Our Clients Benefit From Our Affiliation
with Coldwell Banker Commercial
Coldwell Banker Schmitt Commercial has historically been the originator and closer of some of the most significant commercial transactions in the history of the Florida Keys from Key West to Key Largo. Our client list includes some of the best-known and largest institutions in the Keys including: BB&T Bank, Centennial Bank, Iberia Bank, Capital Bank, and Singh Co. This is due, in part, to our ability to leverage the synergies in Coldwell Banker Commercial’s strength internationally, nationally, and in Florida with the knowledge and experience of Coldwell Banker Schmitt Commercial across the Florida Keys to help our clients successfully meet their commercial real estate goals.
Our affiliation with Coldwell Banker Commercial provides us with multiple benefits as they have approximately 200 independently owned commercial real estate agencies combined into a powerhouse commercial real estate company with a proven track record of over 15,000 transactions a year from sales to leases, from hospitality to retail to office, and from brokerage to property management to consultation.
Our clients’ listings are automatically distributed to the national CBC website in addition to local office sites and several other popular listing syndication sites, and sent to over 3,000 professionals within the Coldwell Banker Commercial organization through its BlueMail service.
|Key Largo||(877) 289-0035||100430 Overseas Hwy.|
|Islamorada||(800) 207-4160|| 85996 Overseas Hwy. |
|Marathon||(800) 366-5181||11050 Overseas Hwy.|
|Big Pine Key|| (800) 488-3050 ||29967 Overseas Hwy.|
|Key West||(800) 598-7727|
1201 White Street, #101