It’s Been A Booming Year For Investment Sales

US sales volume approached $180 billion in the third quarter, with capital entering the market on track to hit an all-time high this year—and Q4 is primed to be another one for the history books.

A “record amount” of capital is on the sidelines waiting to be deployed in North America, according to new research from Colliers, and “investors are eager to tap into these funds.” Pricing also remains strong and on the uptick across all asset classes, led by multifamily (which saw a volume during the quarter that was in line with industrial and office combined).

Colliers researchers call multifamily the “clear-cut volume leader” this year, led by strong fundamentals, rent growth, and a pivot to the asset class from other sectors. Multifamily hit $78.7 billion in quarterly volume, a 16.3% year-over-year increase. The sale of the 46-building Spring Creek Towers in Brooklyn was a standout sale at $1.8 billion, while top markets to watch include Dallas, Atlanta, and Phoenix.

Industrial also remains a hot investment in the US, with 17 of the top 25 markets Colliers tracks reporting record-setting sales growth (including LA, Dallas, and Atlanta). Nearly $40 billion traded hands in the quarter, a 16.9% increase year over year, led by the KKR portfolio acquisition involving 149 properties for $2.2 billion. 

“With global supply chains kicking into gear, the need for additional industrial capacity is clear,” the report notes. “Investors have room to run in this product type, and investment volumes are forecast to reach new highs in Q4.”

Meanwhile, office sales volumes are back to normal levels, and Q3 was the strongest quarter for the sector since the onset of the pandemic, with $34.8 billion in sales. That’s a 16.9% year-over-year increase.  Boston, San Jose, and Seattle are top markets for the sector, but capital is also returning to core coastal markets like Manhattan. Recent high-dollar sales in New York city include the Daily News Building, the Pfizer Building,

The retail sector is approaching normal sales levels, with quarterly volume approaching $17.4 billion, up 12.4% over Q3 2020. Colliers notes that retail fundamentals are “on the mend, with another quarter of positive absorption, the strongest seen since year-end 2017,” and predicts that “the days of record-setting store closures appear to be behind us, with retail once again supporting income streams and attracting investors.” Top markets include Los Angeles, Atlanta, and Phoenix.

Finally, hotel investment was up by 289% over the past year, a somewhat eye-popping number given the stress on the asset class during COVID-19. But “investors are still on the hunt for discounts, perpetuating a bid/ask spread,” the report states.

About $9 billion in sales were reported across the US for the quarter, up 11.4% and led by the $270 million sale of Margaritaville Hollywood Beach Resort in Hollywood, Fla. Midscale assets are dominating recent sales, according to Colliers, and hotels in hubs like Washington D.C., San Francisco, and New York are beginning to trade hands more frequently.