Rising Sales Activity Is Good News, But Not Harbinger of Recovery

NEW YORK CITY-Investment sales activity has taken a bit of an upswing lately. Overall commercial sales posted their highest volume so far this year in the third quarter, at $12.5 billion, according to the latest data from Real Capital Analytics. While it still isn’t as much as was racked up a year ago, the third quarter’s figure was still 24% more than the sales volume achieved in Q2, despite a 12% decrease in the number of properties on the market.

For apartment sales specifically, the third quarter saw $3.6 billion worth of properties change hands, a 12% increase over the prior three-month period and the second consecutive quarterly increase since the credit crash last year. Also telling is that the number of properties trading above the $40-million mark between July and September was about the same amount that was sold during the entire first half of the year. Still, say RCA analysts, these positive developments don’t necessarily mean a recovery is under way; in fact, it’s more likely that a significant rebound in investment activity is still some time to come.

Compared to last year, sales volume in the third quarter is down 64% over the prior year and 85% from two years ago. On a regional level, many markets had only one significant sale during those three months, and some, such as Baltimore and Indianapolis, had none altogether. Other, one-hot markets, including Las Vegas, Jacksonville, FL and Ft. Lauderdale, FL, have each seen less than $50 million worth of multifamily properties trade all year.