Colliers: February Investment Sales Volume Jumps

Commercial real estate investment sales volume totaled $25.1 billion in February, up significantly from January, reported Colliers, Toronto.

But overall investment sales volume is down 53% compared to a year ago and lending standards are tightening, Colliers Research Director Aaron Jodka said in a Quick Hit report.

Jodka said transactional data now reflect price adjustments, with month-over-month declines implying a 23.6% drop, per MSCI, New York. “The recent volatility in the banking industry will have knock-on effects on commercial real estate,” he said.

The Colliers report noted office volume continues to struggle. Central business district activity remained below the $1 billion mark for the second month in a row for the first time since 2010. MSCI said pricing is down 2.2% over the past year, though recent cap rate movement would suggest a far more rapid price adjustment–CBD cap rates are up 70 basis points over the past year, Jodka said. “In addition, some recent high-profile loan defaults suggest future recapitalizations will follow in the months ahead,” he said.

Multifamily sales volume is slowing quickly, Jodka said. Less than $5 billion traded in February, the lowest monthly total since February 2012. “Multifamily fell to the third most heavily traded asset class in the month for the first time since January 2015,” he said. “It is uncommon for multifamily to rank outside of the top two in any given month.”

With more than $9 billion of activity in February, the retail sector was the most heavily traded asset class, Jodka said. But a large part of this figure came from the take-private deal of STORES Capital REIT. “Without it, [retail sector] volume would have come in at $2.0 billion and fallen to a similar extent as other asset classes,” he said.

Jodka called the hotel sector “a mixed bag.” Sales volume fell 53% compared to a year ago, but rose month-over-month. MSCI said hotels saw the strongest price appreciation of any asset class over the past year at 5.4%. In addition, the hotel sector showed a 2.1% price gain, unlike other asset classes, which showed price declines when annualizing monthly statistics.