RCA Insights

US Deal Activity Coasting to End of the Year

By on December 13th, 2018

The fourth quarter is normally the busiest time of the year, with investors looking to close deals before year-end, but in 2018 deal activity appears to be coasting to the finish line. Preliminary volume figures for November suggest a slowdown of investment activity, but 2018 volume is still far enough ahead that the annual total should be higher than that seen last year.

The slowdown in the fourth quarter is more pronounced in the single asset market. The sale of individual assets fell at double-digit rates in October and November on a year-over-year basis, preliminary data shows. Still, because of the strength earlier in the year, 2018 activity for such deals is coming in at a pace 3% higher than that seen through November 2017.

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Portfolio and entity-level transactions are shaping up to be an important driver of deal activity both for November and the year overall. Preliminary figures for November suggest a 26% year-over-year pace of growth in such megadeals. On top of the 40% pace of growth in these deals in October, the fourth quarter may see an overall lift in deal volume largely because of megadeals.

With year-to-date 2018 deal volume already ahead of the level set through November 2017, it would take a catastrophic December for the 2018 total not to surpass 2017 levels.

On December 19  Real Capital Analytics will publish the new issue of US Capital Trends. This edition examines November deal activity and pricing results, and highlights the defining trends for the U.S. commercial real estate market moving into 2019. 

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.