By Jim Costello on March 18th, 2016
Preliminary estimates suggest that U.S. commercial real estate volume fell 48% in February from a year earlier, following January’s 3% drop. Combined with the fall in the Moody’s/RCA CPPI in January — the first monthly decline in six years — there may be concerns that the market is on the verge of broader downturn. Another view is that the market is taking a breather from megadeals.
Portfolio and entity-level deals are down 70% from a year earlier on sales of $6.7 billion, preliminary data shows. The market for CMBS debt, an important driver of megadeals, is facing twin challenges. Turmoil in the corporate bond market spilled over to the CMBS market in the second half of 2015, raising the price of debt, and ongoing concerns about risk retention are also limiting the supply of debt.
Next week, Real Capital Analytics will publish its US Capital Trends reports which will further detail the trends in February deal activity. The reports will also profile the sources of lending that have dominated each property sector in 2015, as well as indicating which types of lenders are poised to gain or lose market share in 2016.