By Jim Costello on January 9th, 2020
The biggest global commercial real estate investors were still hungry for assets in 2019, though stripping out the activity of the largest single global investor shows a more muted appetite.
The top 50 global investors collectively added $35.4 billion of commercial real estate assets to their portfolios last year. Removing Blackstone’s activity suggests that the appetite for commercial property assets approached satiation in 2019, though that satiation seems focused on particular property sectors.
Focusing on this set of big global investors is a way to identify broader trends. The investors holding the most assets will see more potential deals, after all, and thus have more insight into pricing and capital flows. What this group collectively decides to buy can be a signal of what is to come.
The biggest investors worldwide are not necessarily the most active buyers and sellers. Some investors have large holdings and focus more on steady, prudent management of income rather than huge dealmaking. The Real Capital Analytics data set tracks the holdings of each investor worldwide, and for this analysis we looked at the top 50 investors with respect to the office, industrial, retail, apartment and hotel assets they own.
The pace of what the top 50 investors sold slowed from 2018. These investors were involved in dispositions totaling $120.9 billion in 2019 versus $140.4 billion in 2018. While the pace of dispositions slowed, the pace of acquisitions slowed more.
Acquisitions fell from $216.7 billion in 2018 to $156.4 billion in 2019. So, on a net basis, this group of investors was still active in commercial real estate overall, buying $35.4 billion more than they sold. Stripping out the impact of Blackstone, however, net investment increased by only $8.6 billion for the year.
Blackstone had an outsized impact on the industrial markets in 2019. Its acquisition of a portfolio of industrial assets from GLP was the largest non-M&A type acquisition recorded for the sector. Even without the Blackstone activity, however, this group of investors was still hungry for industrial assets globally in 2019. Acquisitions of industrial properties by all groups but Blackstone exceeded the sale of assets by $16.2 billion.
For this group of top 50 global investors, the industrial sector was clearly a preferred sector in 2019. Meanwhile the appetite for investment in the office and retail sectors fell. Net investment was negative $8.4 billion for the office market globally and negative $3.3 billion for the retail market.
The top global investors were still hungry for commercial real estate assets in 2019, but one was more active than the others as they all moved to new preferred property sectors.
Alexis Maltin and Mike Savino provided data analysis for this article.
Real Capital Analytics (RCA) is the authority on the deals, the players and the trends that drive the commercial real estate investment markets. Covering all markets globally, RCA delivers timely and reliable data with unique insight into market participants, pricing and capital flows. For more information, contact us.
Also on RCA Insights: