RCA Insights

Chart: Trends in US Volume vs Pricing

By on January 10th, 2018

The price impacts behind the pullback in U.S. deal volume can be thought about in a supply-versus-demand context. Every asset in the market is for sale at some price level and volume is down as buyers and sellers are too far apart on prices to incentivize owners to sell.

Deal volume and prices moved up every year from Q3’11 through to Q3’16 as buyer aggressiveness and willingness to accept lower yields grew. Into 2017 though, sellers were simply less willing to part with assets. Even though buyers were less aggressive, with fewer quality assets being supplied prices grew.

1801 Costello US limited supply main-01

This chart first appeared in US Capital Trends on Dec. 20. The next edition of US Capital Trends, which reviews fourth quarter and full year 2017 volume and pricing, will be published on Jan. 24.  

Jim Costello

Jim Costello

Senior Vice President
jcostello@rcanalytics.com

Jim Costello has worked in the CRE space on issues of urban economics since 1990, including a 20-year stint at Torto Wheaton Research. Jim expanded the reach of the Torto Wheaton Research team developing forecasts of global market fundamentals. He also developed approaches to pair the forecast results with frameworks to answer investor questions on asset values and relative investment opportunities.

In the aftermath of the Global Financial Crisis, Jim provided advice to the Treasury Department and helped educate these professionals on commercial real estate performance. Jim is a member of the Commercial Board of Governors of the Mortgage Bankers Administration, where he helps policy makers understand the commercial real estate industry.

Jim is expanding the capabilities of the Real Capital Analytics team on issues of real estate market dynamics. Jim has a master’s degree in economics and is a member of the Counselors of Real Estate.