Investment Deals Reach Lowest Level in Four Years in July

High borrowing costs and interest rates continued to batter the U.S. commercial real estate market in July despite early signs of pricing stabilization. According to a recent report from Colliers, the volume of investment deals in July declined by 15% year-over-year, totaling $21 billion. Investment volumes for industrial, multifamily, and retail properties dropped by double digits, with industrial properties seeing the steepest decline at 33%. Multifamily sales fell by 11% to $7.5 billion.

“Individual [retail] deals drove July’s volume, headlined by the sale of Country Club Plaza in Kansas City for $175.3 million,” Colliers reported.

“Simon Property Group and Macerich sold the asset to Ray W. Washburne. In Manhattan, Bando E&C acquired the retail condo at 2 Times Square for $99.3 million, or $3,817 per square foot, continuing the city’s retail hot streak. In Orlando, Lee Vista Promenade traded for $68.5 million.”

Office property sales volume increased by 13% to $3.4 billion, though pricing declined 12% year-over-year. The rise in volume was driven by Healthpeak’s sale of a medical portfolio of 59 assets for $674 million. Other notable office sales in July included 180 Maiden Lane in Manhattan for $297 million and 777 Tower in Los Angeles for $120 million.

Hospitality property sales in July rose by 2% to $1.7 billion, though pricing fell by 7%. A total of 84 hospitality assets were sold—the lowest number in the past four years. The largest individual transaction was the sale of a 452-room property in Hawaii from Blackstone to Host Hotels for $725 million. Although 1,300 properties were sold in July, Colliers found that the average deal size is returning to 2016-2019 levels. Still, the overall decline in transaction volume underscores the persistent impact of high borrowing costs and interest rates on the market.