Deal volume across all asset classes dropped 59% year-over-year in February, thanks largely to the absence of “blockbuster entity-level” deals and a dearth of office sales, which showed a staggering 71% loss over 2020 levels.
New research from Real Capital Analytics showed portfolio and entity-level sales declined an eye-popping 90% “with no supersized deal last month to match the Prologis acquisition of Liberty Property Trust in February 2020.” Apartment sector deal volume fell 33% year-over-year as well.
The February numbers showed a few silver linings, however—individual industrial asset sales were near a record level, and CMBS and investor-driven lenders picked up speed at the end of 2020, accounting for a combined 19% share of the US lending market in Q4.
Meanwhile, the Green Street Commercial Property Price Index was stagnant in February, with the all-property index hovering 7% below pre-COVID levels with “significant variation in price changes,” the firm noted.
“It’s tough to generalize about property pricing because things are unusually asset and sector specific these days,” said Peter Rothemund, managing director at Green Street, in prepared remarks. “Property types with a strong top line such as industrial and self-storage are at record levels, whereas assets feeling the pain right now—or where the fallout over the next few years is still up in the air—have seen declines. In some cases, sizable ones.”
Pricing and cap rates for Class A industrial product should stabilize for the rest of 2021, according to Cushman & Wakefield research, with properties in the Inland Empire of Southern California, New Jersey, South Florida, Seattle, and Dallas commanding the most aggressive overall rates. Investors are increasingly looking to Class B and Class C product to maximize returns on industrial investments, experts say.