National commercial real estate transaction volumes softened by 9.0 percent in 2017 as investors pulled back from big-ticket single-asset transactions in gateway markets.
However, the appetite for real estate debt and equity remains high, and investors—both domestic and international—are seeking to double down on their exposure to real estate. And investors have ever more pressure to deploy capital to achieve returns. This, in an environment of low yields, and amid rational and disciplined underwriting, is driving investor creativity:
Selectivity and rational underwriting are dampening overall transactions volume; investors’ approach to primary vs. secondary markets is changing
Asian capital remains dominant in the U.S. and is now impacting all sectors
Value add funds deployed nearly $27.0 billion in 2017, in excess of 50.0 percent more than opportunistic funds
Lending remains stable amid comeback from CMBS and increased presence from debt funds
Despite elevated deliveries, multifamily transaction activity ended 2017 on a strong note.
Rational and disciplined underwriting remains the norm for office product.
Industrial transaction activity represented the only sector to experience growth in the U.S. in 2017.
While investors remain cautious, increased retail sales volume is expected for 2018.
The Lodging sector is benefiting from healthy demand in the three major sources of business–corporate transient travel, group business and leisure travel.
Net lease transaction volumes parallel broader commercial real estate transaction trends and represent more normalized activity.
View the complete H2 2017 U.S. Investment Outlook for more on these latest trends per sector.
President, Americas Capital Markets
Senior Director, Americas Research
Director, Americas Research