2018 CRE Transaction Volume Near Record

Commercial real estate transaction deal volume totaled $537 billion in 2018, the second-largest year on record for CRE sales in the U.S., reported Ten-X, Irvine, Calif.

An “impressive” close to 2018 positioned the commercial real estate market for a strong start to 2019 and that momentum continued through the first quarter, the Ten-X Volume and Pricing Trends report said.

“The current economic expansion in the U.S., now the second-longest in recent history, eased investor concerns and fueled commercial real estate growth throughout 2018,” said Ten-X Chief Economist Peter Muoio.

But Muoio noted the strong deal volume is not translating into further commercial real estate pricing growth. “The pricing climate remained stagnant in the early months of 2019, as it was throughout all of last year,” he said, noting persistent flat pricing has decreased the “disconnect” formerly seen between buyers and sellers on pricing expectations. “The general realization of late-cycle commercial real estate fundamentals is, ironically, boosting deal flow,” he said.

Commercial and multifamily mortgage bankers closed a record $573.9 billion in loans last year, the Mortgage Bankers Association reported yesterday. MBA said the dollar volume of commercial and multifamily mortgages closed last year at 8 percent higher than in 2017.

MBA Vice President of Commercial Real Estate Research Jamie Woodwell credited solid fundamentals, growing property values, low interest rates and strong appetites from both borrowers and lenders for the lending increase.

Ten-X reported retail sector transaction volume finished the year strongly. Though retail fundamentals remain weak, retail deal volume reached $84.5 billion last year, its highest since 2015. Muoio attributed the change to significant mergers and acquisitions activity the sector experienced as investors began to redevelop properties.

“Retail deal volume has been boosted by M&A, in addition to buyers looking to re-position retail assets as bricks and mortar retail continues its transformation,” Muoio said.

Real Capital Analytics, New York, said M&A deals involving entity-level transactions or portfolios grew 131 percent year-over-year.