Executive Summary

  • Investment volume surged to $176.9 billion in Q3—the highest quarterly total since at least 2005. Volume was up 151.4% from Q3 2020 and 30.1% higher than the Q3 average from 2015 to 2019.
  • Volume increased significantly across all sectors. In percentage terms, growth was strongest for hotels (318%)—given the extreme decline in activity last year—and weakest though still very sizeable for industrial (124%), highlighting the sector’s resilience during the pandemic.
  • Cross-border investors registered the strongest year-over-year Q3 growth in investment (506.5%), while REITs/public companies had the greatest increase over the quarterly average of the three years prior to the pandemic (23.6%).
  • Cap rates fell over the past year for all major property sectors. Multifamily (-39 basis points), hotel (-34 bps) and industrial (-29 bps) had the largest declines from Q3 2020. However, these changes were based on a relatively low level of transaction volume in Q3 2020.
  • Total annualized NCREIF return accelerated to 12.1% in Q3, the strongest increase in nearly six years. All sectors posted positive returns except hotels, although the decline in that sector was much smaller than in recent quarters. Annualized industrial returns were up by more than 32% in Q3.