Green Street: CRE Sales Volume Down Nearly 50% Compared to Last Year

Commercial real estate sales volume is down approximately 50% compared to last year’s second quarter, according to Green Street, Newport Beach, Calif.

Annual transaction volume is generally between 2% and 5% of asset value; right now it’s closer to 1%, Green Street said in a special report, Property Insights: Quarterly Transaction Trends.

Green Street analyzed data from its U.S. Sales Comps database of verified transactions $5 million and up to provide insight into market health and where investors are allocating capital.

“Broader macro conditions are not supportive of CRE transactions right now,” said Green Street Managing Director and Co-Head of Strategic Research Daniel Ismail. “Credit availability has tightened, and that combined with higher interest costs, a persistently wide bid-ask spread, and the lack of forced sellers is limiting deal flow.”

Ismail noted the decline remains fairly broad-based. “No markets appear to have avoided material slowdown in transaction activity,” he said. “The office sector has shown the most pronounced drops–particularly in markets like Houston, New York and Atlanta–relative to estimated market value, while apartments and strip centers stand out with steep year-over-year volume declines.”

Despite some cyclical headwinds, REIT M&A has picked up in the third quarter, “and major deals in office and industrial provide North Stars for values and some glimmers of hope,” Ismail said.