RCA Insights

US Deal Activity Stumbles in January After Record December

By on February 24th, 2021

Activity in the U.S. commercial real estate market stumbled in January after an end-of-year surge in apartment, industrial and office sales had led December 2020 deal volume to a record level, the latest edition of US Capital Trends shows.

Transaction volume fell 58% in January from a year prior, similar to the declines seen in the second and third quarters of 2020. By contrast, December deal volume had increased 8% year-over-year to broach the $80 billion level for the first time, according to RCA records.

December was the strongest month ever for apartment sales and the second strongest for industrial property sales. For the office sector, December deal volume was at the highest level since 2019. The growth in deal activity fits with the typical last-minute rush to close deals by the end of the year, with some element of transaction activity likely a function of deals delayed from earlier in 2020 due to Covid-19.

In January, all the key property types except for senior housing fell at significant double-digit rates. Price trends, however, suggest a more positive open to 2021. Industrial cap rates, measured on a 12-month trailing basis, fell 20 basis points from a year earlier to average 6.0%. Apartment cap rates compressed by 30 basis points to reach 5.1% in January.

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Clients of Real Capital Analytics <<click here>> to download the latest US Capital Trends from the RCA website. In this edition we report on January 2021 deal activity and pricing, and examine the shifts in buying and selling activity by institutional, cross-border, private, listed and other investor groups during 2020. 

To learn more about how RCA’s reports, data and tools can inform your investment decisions, contact us.

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.