Recent Sales Volumes Signal Strengthening Market for Some Sectors

Although May sales volume totals remained low, portfolio activity along with properties on the market indicate stronger months could be coming. After single-digit, year-over-year declines in March and April, volume was down 38% in May, according to the Colliers update based on MSCI data.

The office market typified the volatility of monthly sales activity in 2024, with sales volume off 42% from last May at $2.3 billion transacting and the fewest individual asset trades this year. The three largest deals in May took place in the Bay Area, according to Colliers. They include Pleasanton Corporate Commons trading for $151.8 million, Sunnyvale Park Place trading for $100.5 million and 1455 Market Street in San Francisco trading for $96.9 million.

Industrial sales volume, on the other hand, increased month over month, with $5.4 billion in trading activity. Of note, Prologis sold a 4.1 million square foot portfolio in Minnesota to Exeter and Blackstone sold two portfolios to Terreno Realty and DRA Advisors. This increased activity is a sign of improving liquidity in the industrial market, said Colliers.

Multifamily sales activity also trended up in May with $6.7 billion in volume. This sector remains the most liquid asset class and recent portfolio activity signals a possible rebound from significant sales declines year over year. The most notable multifamily transaction in May was the sale of a 7,300-unit portfolio by Starwood Capital to Brookfield Asset Management for $1.6 billion.

In the retail sector, only 173 properties traded, representing the lowest monthly activity since 2010. Sales volume was down 51% year over year to $2.1 billion. However, the luxury niche of the retail segment is an exception to the downturn. The largest retail deal in May was the acquisition of 680 Madison Ave. in Manhattan by TZ Capital for $180 million. Tenants  include Tom Ford, Brioni, Oscar de la Renta, Morgenthal Frederics and Missoni.

Finally, hospitality sales activity was restrained in May, said Colliers. Seventy-one assets traded for $1.5 billion, down 32% in volume from last year. That is the lowest number of trades since August 2020. Volume was driven primarily by one large transaction – the sale of the Biltmore Resort & Spa in Phoenix for $705 million, or $1 million per room.