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1031 exchange demand is driving the majority of transaction volumes during the pandemic. While some new opportunistic capital has entered the market, the majority of investment demand for CRE assets is coming from 1031 exchange buyers. The activity has not only helped to prop up transaction volumes but has also helped to stabilize pricing through the pandemic.

“Many investors are afraid of COVID-19 and the effects on real estate values, so we are seeing a variety of cash investors walking away from deals,” Dwight Kay, founder and CEO of Kay Properties and Investments, tells GlobeSt.com. “However, for those who are in a 1031 exchange, if they were not to complete the exchange, they would be subject to 40%-plus in taxes. As a result, even in the midst of uncertainty due to the Coronavirus, 1031 exchange investors are proceeding with transactions to defer a large tax bill.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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