Dallas was the top target for CRE investment dollars in 2021, nabbing nearly $47 billion in capital over the course of the pandemic year.
The city’s investment volume was 77% above the market’s prior record high, according to data from Real Capital Analytics; Manhattan is the only market to ever record a higher annual number, according to RCA’s Alexis Maltin.
“Portfolio activity did boost overall investment levels in Dallas, but single asset sales alone were enough to overtake the market’s prior record for deals of all types,” Maltin says, noting that Dallas was also the number-one market for investment dollars in 2020.
Dallas was followed by Atlanta ($37.1 billion), which posted the highest-ever annual ranking for the Georgia city. Los Angeles ($31.7 billion), Phoenix ($29.3 billion), Houston ($27.4 billion), Boston ($25 billion), and Seattle ($21.4 billion) were next in line, followed by Chicago ($20.4 billion), Manhattan ($18.7 billion) and Denver ($17.9 billion).
Boston was the only market to have record transaction volume overall and across four of the five core property types RCA measures. The city’s #6 ranking was three ranks below its 2020 spot.
“Much of investors’ interest in Boston is tied to industries concentrated in the market,” Maltin says. “Asset sales linked to Boston’s R&D/life sciences sector were behind 28% of total purchases in 2021.”
Boston was also the most active city for office investment in the first three quarters of the year, with $8.5 billion of sales closed, according to Colliers.
Manhattan’s #9 ranking was the worst-ever for the market, “but the race for the top perhaps is not a fair one,” she says.
“The dominant sectors in the top 25 most active markets for 2021 were apartment and industrial. With uncertainty still plaguing the office sector, and its industrial needs outsourced to neighboring markets, Manhattan is fundamentally not structured to land atop the ranks,” Maltin says. “In 2021, office investment accounted for over 50% of Manhattan’s overall investment.”
Experts agree that the biggest impact of office declines in New York City is likely to be felt in B- and C-class space.
“As you look across the city, New York has a lot of B and C buildings that no one’s going into,” Cherre co-founder LD Salmanson told GlobeSt.com at the beginning of September.