CRE Posts Sizeable Gains in Q3

Sales volume for office and multifamily grew, unlike retail and industrial.

The commercial real estate market has continued to show signs of recovery for the third quarter as sales volumes across most asset classes either grew or stabilized. According to a new report from Colliers, sales in the third quarter held steady year-over-year and increased over the second quarter, marking the first back-to-back gains in volume since 2022.

Aaron Jodka, Colliers’ research director and author of the report, noted that office and multifamily saw significant year-over-year gains, while industrial, retail, and hospitality showed mixed performance.

Office sales grew by 13% year-over-year after several quarters of subdued activity, with transaction volume concentrated in central business districts, where volume rose by 79% following historic lows in Q3 2023. The office sector’s performance from July to September suggested fundamentals are stabilizing, Jodka said.

Conversely, retail sales volume declined by 27% in the third quarter. This drop, according to Colliers, reflects a large portfolio sale that boosted last year’s transaction volume. However, excluding that deal, single-asset and portfolio transactions are up year-over-year, with non-entity deals remaining stable since the start of 2023, Jodka added.

“Multifamily remains the perennial leader in investment sales volume, ending Q3 up 9% year-over-year, marking the second consecutive quarterly increase,” Jodka said. “Sales have averaged $38.3 billion over the past two quarters, aligning with 2017 levels.” While multifamily sales are far from the post-pandemic peak, he noted that investor activity remains strong, particularly in markets like San Francisco and Boulder, where year-to-date activity is setting records.

Colliers reported that industrial sales volume in the third quarter remained flat year-over-year, while pricing grew by 7% over the same period. Jodka highlighted that average sales volume over the last two quarters has exceeded $23 billion, with year-to-date totals surpassing pre-pandemic levels seen from 2014 to 2017.

Lastly, hospitality transaction activity has shifted toward full-service properties, with sales for this category up 53%, driven by large single-property transactions. While sales volume for limited-service hotels dropped 35%, overall hospitality volumes remained flat compared to the third quarter of 2023.