By Jim Costello on January 18th, 2018
Typically, the month of December is the most active of the year for U.S. commercial real estate and the fourth quarter volume accounts for over a third of total annual activity, but not so in 2017. December 2017 was among the most active months of the year, but fell short of the seasonal surge evident in each of the prior eight years.
For the full year 2017, preliminary data shows volume fell at a year-over-year pace similar to that set in the first half of the year. As such it is unclear if the lackluster finish to the year is anything more than just a continuation of the existing trend. Despite the decline in volume, there were definitely bright spots in the market in 2017.
The leader for growth in the year is the industrial sector which had its second most active year in history for the sector. Also of note, the total deal volume for the industrial sector has now surpassed that of the retail sector by a wide margin.
Suburban office and senior housing also posted gains for 2017. The increase in suburban office is somewhat surprising since the sector’s investment trends have lagged far behind the other sectors for many years.
This increase also evidences the movement of capital away from sectors and markets now considered richly priced. As further evidence of this capital movement, the apartment sector posted its first annual decline in volume this cycle while the CBD office sector posted the sharpest year-over-year decline.
In our 2017 Year in Review US Capital Trends report to be published next week, we will provide in-depth analysis of all property types and track changes in investor activity by market, property sector and investment style.