Nonetheless, 'the competition for institutional-quality assets continues to push values higher, and 16 of the 40 Avison Young US markets registered sales volume in excess of $3 billion. Not surprisingly, Los Angeles and New York topped the list.”

Perhaps reflecting Canada's enviable economy, the US' northern neighbor regained the lead for cross-border acquisitions in this country, displacing China. as the largest source of cross-border investment. Amid the overall pullback by Chinese investors, though, investment from other Asian countries, including Japan, Singapore and Hong Kong, increased.

“Valuations have remained high across asset classes, and deals that do execute reflect strong pricing, leading owners looking to balance portfolios to bring deals to market,” says John Kevill, AY principal and managing director, US capital markets. “Generally however, uncertainty in financial markets, macro-economic conditions and increasing geopolitical risk have investors largely satisfied with their real estate portfolios, and those who don't need to transact are increasingly taking a wait-and-see approach.”

The first six months of the year have highlighted “a widening gap between seller expectations and buyer underwriting in properties where there is near-term asset-level risk,” Kevill says. “In many instances, a view that we are late in the cycle is limiting buyers' ability to underwrite steady growth, thus negatively impacting price. As a result, many deals are not getting done, contributing to the decrease in sales volume.”

Rose sums up, “As we go through 2017 and into 2018, the commercial real estate investment market will continue to be characterized by motivated buyers and sellers operating in relatively stable property markets and in a largely still-favorable debt environment. Despite elevated valuations, in the longer term, interest rates will rise and asset pricing will normalize.”