That increase in dollar volume coincided with a 12% decline in the number of deals, according to RCA. In its latest report, the firm says the increase in average deal size can be interpreted as "a positive signal, since larger deals have been rare this year."

Also seen as positives during Q3 were the "significant" 20% pullback in the aggregate value of new offerings coming to market, suggesting that sellers are becoming more selective or realistic, and the drop-off in new distress. RCA says it declined 33% in dollar volume and 58% in the number of newly distressed properties compared to Q2. However, RCA's report points out that Q2 was skewed upward by several large corporate bankruptcies.

Moreover, according to RCA, "the $29 billion of commercial property falling subject to default, foreclosure or bankruptcy in Q3 is above levels in Q1 or prior and continues to dwarf the volume of properties sold." The report notes that the percentage of distress-related sales doubled in Q3 to 17%, but is still "well below expectations, as lenders are generally favoring extensions and modifications over liquidations."

Office sales in the US made an especially strong showing, up 85% over the second quarter to $4.8 billion. Deal size increased to an average of more than $30 million, and there were more transactions of $100 million during Q3 than there were for Q1 and Q2 combined, according to RCA. Even so, dollar volume in the office sector is off 90% from two years ago, while other sectors showed comparably depressed tallies compared to the 2007 peak.

Apartment properties of $5 million or more rose 12% in Q3 to $3.6 billion in Q3. As with office, deal sizes increased, with Q3 seeing as many properties trading above $40 million as in the entire first half of '09. "Despite these positive signals indicating the start of a rebound in investment activity, a significant recovery is still well into the future," according to RCA.

The same could be said about recovery in the retail sector, according to RCA. However, sales of retail properties totaled $2.1 billion in Q3, up 36% over Q2 and the first quarterly rise in two years. The gain in Q3 brings the year-to-date total to $5.7 billion.

Industrial sales, which ranked fourth in terms of Q3 dollar volume, were also the only category to show a decline from Q2. Even with a 35% drop-off from Q2 levels, though, the sector managed $1.5 billion, according to RCA. However, September marked the lowest monthly tally of the quarter and possibly the decade, with just $400 million worth of industrial assets changing hands.

The hospitality sector was up 25% over Q2, with the tally of $641 million in Q3 representing the first quarterly increase in hotel sales since the onset of the credit crunch, RCA says. The report notes that many markets managed just one significant sale in Q3, while several, including Phoenix and the outer boroughs of New York City, had none.

Globally, sales volume continued its upward trajectory from Q2, rising 40% for nearly $220 billion, according to RCA. US sales grew at a little more than half the global pace, and contributed just 11% of quarterly global volume, while China accounted for nearly half.

Instant Insights /

US Sales: First Quarterly Gain Since '07

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