Investment sales activity in the overall multitenant market climbed to $53.9 billion during the fourth quarter, up 36.8% from the third quarter. Year-over-year, multitenant sales volume was up 18.8%, according to a Northmarq report.
Total annual sales volume for the multitenant market was $166.9 billion, which narrowly surpassed the full-year 2023 volume by 2.9%. All sectors, however, currently lag behind the strong performance reported in 2021 and 2022, according to Northmarq.
The industrial sector led investment sales activity, accounting for $22.8 billion during the fourth quarter. That was up 31% from the previous quarter, the Northmarq report said. Office transactions accounted for $19 billion in activity, a 60% increase that marked the sector’s strongest performance since Q3 2022. Retail activity came in at $12 billion, which was its strongest showing in more than a year, said Northmarq.
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For the year, the industrial sector captured the largest share of total investment volume, maintaining its top position with $70 billion in sales activity. The sector was driven by demand for modern facilities and logistics and regional hubs. The office sector outperformed expectations with $53.7 billion in sales, driven by investor interest in medical office properties and large portfolios, said Northmarq. Retail fell slightly below 2023 levels, with $43.1 billion in sales activity. The sector, however, continues to benefit from increased interest in open-air shopping centers and services-based retail.
Cap rates for multitenant investments rose modestly to end 2024, increasing only four basis points to an average of 7.05% That was up 35 basis points year-over-year and was the highest overall average in more than a decade, Northmarq said. Office cap rates were 7.47%, retail cap rates were 7.2%, both up from the previous quarter, while industrial cap rates were 6.17% for the fourth quarter, down slightly from the previous quarter. The overall average cap rate vs. 10-year treasury spread was 250 bps to end the year.
Fifty-five percent of the buyer pool was made up of private investors, a group that was particularly active in retail. Private investors purchased 63% of assets traded within the retail sector.
Institutional buyers accounted for 22% of the overall market and were notably focused on industrial properties. REITs captured 11% of total activity and favored retail and office acquisitions. Northmarq said international buyers contributed only a small fraction of transactions last year compared with historic averages.
The firm is optimistic about 2025 for the multitenant market, with investors likely to continue to favor industrial and e-commerce assets. Recovering office and evolving retail formats also could capture the attention of opportunistic investors, Northmarq predicted.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
