Strong Q4 Activity Pushes 2018 Above 2017 Investment Volume

  • Commercial real estate investment volume rose 20.6% year-over-year in Q4 to $152.4 billion.1 Including entity-level transactions, total investment for the year was $534.8 billion, a sizable increase of 14.8% from 2017. Excluding entity-level transactions, which are highly volatile from year to year and can skew annual comparisons, 2018 investment volume was still up by a healthy 4.9%.
  • Greater New York, Greater Los Angeles and the San Francisco Bay Area attracted the most investment in Q4, accounting for 27.7% of all acquisitions. The top-15 markets accounted for 64.4% of total Q4 investment volume.
  • The only sector with cap rate compression in H2 2018 was industrial, according to the latest CBRE North America Cap Rate Survey. CBD/infill cap rates increased more than suburban for office, multifamily and hotel.
  • Pricing for office, multifamily and industrial properties reached new highs. Increases in multifamily and industrial pricing led the national index, though the pace of growth for multifamily decelerated in 2018.
  • Overall, commercial mortgage production in 2018 was slightly softer than in 2017, as a marked drop in CMBS activity outweighed strong GSE lending. Combined lending for those groups decreased by 3%. Still, CBRE’s Lender Momentum Index was up 13.6% year-over-year.

1All references to deal volume cited in this report are based on Real Capital Analytics' transactional data, which includes entity-level transactions and excludes development site transactions.