C&W Reports ‘Modestly Rising’ 2Q CRE Transaction Volume

Commercial real estate transaction activity totaled $105.5 billion in the second quarter, flat from early 2018 and up 1 percent year-over-year, reported Cushman & Wakefield, New York.

“The picture that emerges of the first half of 2018 is one of modestly rising volumes,” said Cushman & Wakefield Americas Head of Capital Markets Research David Bitner. “The volume of single-asset sales under $250 million was the highest on record, just besting the first half of 2016. Multifamily and industrial single-asset sales posted strong increases, hotel and suburban office sales less so and central business district office and retail volumes were down.”

But major markets are bouncing back, the C&W U.S. Capital Markets MarketBeat report said. Year-over-year, major markets experienced an 11 percent increase in activity while secondary market volume dropped 10 percent. Among major markets, only Boston saw transaction activity decline due to weaker central business district office and multifamily sales. Volume increased strongly in Chicago as central business district and suburban office volume surged and also in greater San Francisco due to strong retail and suburban office activity.

Among secondary markets, volumes rose sharply in Las Vegas and Phoenix due to strong hotel and multifamily sales, while activity declined in several top Sunbelt markets including Dallas, Atlanta, Houston and Austin, Texas.

Compared to last year’s first half, major metro volume increased 7 percent to $91.4 billion, still well shy of the volumes recorded in 2015 and 2016. Major metro volume increased across product types with the exception of office.

Transaction volumes for most product types declined in the second quarter. Only suburban high-rise multifamily, strip centers, development sites and malls recorded quarterly volume increases. Industrial, hotel, central business district office and garden apartment volumes all fell.

Most classes of investor increased acquisitions in second-quarter 2018 compared to the same period in 2017, the report said. Private capital again constituted the largest buyer pool at 50 percent of acquisitions, followed by institutions at 23 percent. Both groups “marginally” increased their acquisitions, Cushman said. Private capital bought more central business district office and hotel properties than a year ago while institutions acquired hotels, industrial and both downtown and suburban office properties in greater volumes.