During the first nine months of this year, sales of portfolios overall were off by 32%, a Y-O-Y decline in TD volume that was exceeded only by hotels. “These megadeals were a prominent feature of the market in '15 and activity for 2016 through Q3 simply faces too high a hurdle to generate growth in deal volume relative to last year,” according to RCA's Big Picture report for the quarter.

Conversely, the Y-O-Y uptick in single-asset sales reflects “an important sign of investor confidence in the commercial property market as the deals are underwritten to the strengths and weaknesses of individual properties.” Volume in single-asset deals was $92.2 billion for Q3 and $265.4 billion YTD.

Geographically, deal volume was strongest in the secondary and tertiary markets, with deal volume falling 8% Y-O-Y in the six major metro areas, while increasing 17% Y-O-Y in tertiary cities. On the other hand, to the extent there was growth in sales activity for some of the riskier property subtypes, it was seen in the 6MM.

For instance, according to RCA, suburban office volume was up 1% overall in Q3 but up 7% in the 6MM. And sales of garden apartments were up 14% Y-O-Y in Q3 but up 44% Y-O-Y in the 6MM. “So to the extent investors are taking on risk, some are clearly looking at taking on asset risk but not market risk,” RCA says.

Even with deal volume off from a year ago, cap rates have continued to compress for most of the major property types. For industrial properties and suburban offices, cap rates have declined by 30 and 40 basis points, respectively, as of the end of Q3.

Meanwhile, apartment cap rates already were trending downward, but most recently have steepened their decline, falling by 60 bps Y-O-Y into Q3. “With few other positive yield alternatives in the capital markets, pricing on apartment assets is getting more aggressive,” according to RCA's latest report.