August Data Suggests Market May Be Turning a Corner
Multifamily is stabilizing, retail is dropping and hospitality is trending positive.
All CRE asset classes have seen activity increases in August on a monthly basis, but volume was down year over year by 15%, according to a Colliers report penned by Aaron Jodka, the firm’s research director for capital markets. Future volume is expected to rebound as the Fed is likely to further reduce rates after its 50 bps cut in September.
The number of properties traded came at a new cyclical low in August, according to the report, but in aggregate, prices rose on a year-over-year basis.
Office may have found a bottom in terms of volume, the report said. The sector posted back-to-back months of stronger volume compared to the same time last year, ending August with $4.2 billion in volume. Although total transactions remain low, activity is increasing in the $100 million range and above price category.
Industrial activity has been uneven this year, with gains recorded earlier in the year and transitioning to declines over the summer. Industrial sales were down 27% year-over-year on $6.2 billion of trading in August.
Multifamily is showing signs of stabilization, with nearly $10 billion in monthly sales, the report said. Initial reports show volume decreasing 9% for the month, but additional deal information could change volume from flat to slightly up. If so, that would mark three consecutive months of multifamily volume increases.
Retail activity dropped off in August after remaining flat for several months. The report said this could be related to strong monthly tallies in August and September of last year making this year’s comparisons challenging. On a month-over-month basis, retail sales volume increased to $3.6 billion.
In the hospitality space, year-over-year sales volume has been positive in four of the past five months. In August, a total of $2.2 billion was traded, an increase from the prior month and a slight uptick from the previous year. However, less than 100 properties traded overall, so while volume is showing signs of recovery, velocity has yet to, said the report.