Big money investment deal volume was down 34% last year, marking the most significant decrease in activity over the last decade for the largest institutional money managers with CRE allocations in their portfolios. 

A new report from Reonomy highlights a series of market shifts underpinning big money investment activity, noting that pandemic-era deals focused more on lower-cost-of-living markets. Cities like Charlotte, Minneapolis, and Nashville also saw considerable increases in big money investments, but those markets still remained out of the top 10 for portfolio allocations in 2020.  And while the declines in investment in markets like Washington, D.C., San Francisco, Miami, Dallas, and Houston is hardly unexpected, the report had some surprises: Atlanta and Boston, for example, saw big money investment activity increase year-over-year and when compared against their 10-year average allocations.

Property type also mattered when it came to attracting big money investment, the report notes, with the public markets feeling the most pain as special servicing and delinquency rates skyrocketed and hospitality REIT share prices took a hit. "Big Money investment activity into hospitality properties during the year also corroborated this 'hardest hit' narrative," the report notes: on average last year, big money invested a mere $3.82 out of every $100 into the asset class, down from $8.59 the year before. But despite that, on the whole investment in hospitality properties was consistent with the 10-year historical average dollar volume (3.6%) allocated to the sector. Big money managers acquired more than $939 million in hospitality space last year, down 70% compared to 2019, and the average price sank 59% year-over-year, changes Reonomy suggests are "suggestive of a shift away from higher quality product (e.g., less full-service and more budget or economy) and deep discounts on distressed properties."