Fewer Entity-Level & Cross-Border Deals Contribute to Moderately Slower Start to 2019

  • Commercial real estate investment volume decreased by 12.7% year-over-year in Q1 to $99.6 billion.1 Excluding entity-level deal volume, which is very volatile from year to year and was exceptionally high in 2018, investment volume decreased by a more moderate 9.6%. Trailing four-quarter volume increased by 11.6% year-over-year, the second-highest rate since 2015.

  • In contrast to the overall trend, volume rose significantly in many markets. Tampa, Boston and Charlotte had the largest increases in investment volume, each with growth of more than 30% year-over-year for the four quarters ending Q1.
  • Cap rates moved modestly year-over-year in both directions with divergence across property subtypes. Cap rates for garden-style apartments, industrial-flex properties, limited-service hotels and CBD office decreased by 15 bps or more.
  • Commercial mortgage production got off to a healthy start in 2019. Though CMBS lending declined year-over-year in Q1, the pace of decline slowed and was outweighed by an uptick in the rate of growth for GSE lending. CBRE’s Lender Momentum Index was up 17.9% year-over-year.
1 All references to deal volume cited in this report are based on Real Capital Analytics transactional data and includes entity-level transactions but excludes development site transactions.