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.
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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.
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