Deal volume has fallen sharply since the onset of the pandemic, but luckily refinancing transactions have kept the capital markets moving. In the first half of the year, refinancing activity drove the majority of the US capital flow.

According to new data from Real Capital Analytics, refinancing accounted for 50% of all capital flows to commercial property in the first half of the year. By contrast, new acquisitions accounted for only 30% of US capital flow to commercial property, despite the low interest rate environment. This aligns with the decrease in national sales activity, which fell by 67% in August. Year-to-date, national investment sales are down 36%, on par with the capital markets activity for acquisitions.

In a larger sense, this trend isn't all that different from a typical market cycle. Refinancing deals generally drive US capital flows, although to a lesser extent than is happening now, Real Capital Analytics notes. In the first half of 2019, refinancing deals accounted for just under 50% of market activity, and new construction financing was on par with activity this year. Acquisitions were slightly higher, but not enough to show a significant change in trend.