Commercial Real Estate Investment Volume At Highest Pace In 16 Years

The deal volume for U.S. commercial real estate in July skyrocketed by 74% from one year earlier, according to a new data report from Real Capital Analytics, which noted that last month’s deal volume was also above the average pace set across each July since 2005.

What Happened: Within the overall commercial real estate environment, the apartment sector attracted 35% of the month’s total commercial real estate investment.

The apartment market also led price gains in the month of July, with prices of apartment buildings up 13.5% year-over-year, the fastest pace since the housing boom of 2005-2006.

The office sector comprised 26% of sales volume for the month. Within the office sector, suburban-based activity was the driving force as central business district (CBD) properties showed less attractiveness based on continued uncertainty about office space use in urban markets. The suburban office price index jumped 11.7% in July from one year earlier, while the CBD office index was down by 4.6%.

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What Else Happened: Separately, the delinquency rate on commercial mortgage-backed securities (CMBS) dropped in August to a new post-crisis low, according to data from Trepp LLC.

The August reading of 2.54% was an eight-basis-point decline from July and a 110-basis-point drop from August 2020. The CMBS delinquency rate started to fall after June 2017 when the rate was 5.75% and has been in decline for 22 of the last 26 months.

Among the sectors within commercial real estate, lodging had the lowest delinquency reading at 1.54%, while retail had the highest at 4.07%.

Photo: John Taylor/Flickr Creative Commons.