The commercial real estate investment market has never been so divided between the “haves” and the “have-nots”.
Investment in commercial real estate in the second quarter of the year reached $190.3 billion, the third highest quarterly amount since 2002, but most of that investment was driven by multi-family and industrial properties, while that the US office market has conversely slipped further into its decline, according to a new report brokerage Newmark.
“The second quarter was phenomenal” David Bitner, executive managing director of global research at Newmark, said of the overall investment numbers. “It’s either the best or almost the best second quarter we’ve had.”
Newmark’s second-quarter U.S. commercial real estate report found investment rose 17.5% from the previous quarter, but multi-family and industrial properties took the lion’s share, two asset classes representing 57% of the funds that investors spent on commercial properties in the United States. first half of the year.
“If you think of a sell process, it often takes two to three months, so anything that closed in June probably started in March,” Bitner said of the lagged nature of the sell data. “There was a lot of momentum for these deals that started a process and had been able to anchor some of their pricing before the Fed’s rate hike and the tightening of financial conditions, that’s part of what supported and allowed the momentum to continue in the second quarter.”
In terms of markets, Dallas attracted the highest investment volume of any other in the United States with $11.0 billion, of which 56.3% was for multifamily. According to the Newmark report, fast-growing Sun Belt markets such as Charlotte, North Carolina, Nashville, Tennessee, and Tampa, Florida, as well as New York, all saw substantial year-over-year investment volume growth. on the other.
“Especially on the multifamily side, the fundamentals have been so strong in Dallas, lin[ing] with migration data,” Bitner said. “Major gateway markets are increasingly becoming an easy dividing line given that places like Dallas and Atlanta are equally liquid.”
Private investment in commercial real estate boomed in the first half of the year, with investors pouring $23.2 billion into the sector. by Blackstone BREIT was leading the pack, accounting for over 70% of transactions nationwide (the B in BREIT seems to represent billions, not just black stone).
The incredible amount of investment could be short-lived, according to the report.
“The combination of persistently high inflation and slowing growth presents a nuanced challenge for property markets,” the report said. “While transaction volumes were extremely strong in the first half of the year, we expect activity to slow due to the changing economic outlook and macro-financial conditions.”
“The transactions were still ongoing, but there were price adjustments, and knowledge of those price adjustments could lead to this slowdown in the third quarter,” Bitner said.
With additional reporting by Celia Young.
Emily Fu can be reached at [email protected].