Q1 Investment Volume Falls 27.6% Year-Over-Year

  • Q1 investment volume1 fell by 27.6% year-over-year to $92.4 billion but was on par with average Q1 volume from 2011 to 2020. Excluding entity-level and large portfolio transactions, Q1 investment volume fell by 20.4% year-over-year.
  • Price discounts and one large-ticket transaction drove growth in the hotel sector. Multifamily and industrial also showed resilience in single-asset investment over the past 12 months.
  • Private investors remained active, while REITs/public companies registered the largest year-over-year decline in transaction volume (-75.0%).
  • Foreign investors targeted office and multifamily assets in Sun Belt markets like Atlanta, Dallas and Phoenix.
  • Multifamily and industrial cap rates continued to compress in Q1, while CBD office cap rates also fell due to reemerging demand. Retail and hotel cap rates increased slightly.
  • While the annualized total return of 2.6% in Q1 was half of what it was a year ago, it gained a full percentage point from Q4 2020, mainly as asset appreciation started to recover. Across all sectors, industrial saw the largest appreciation at 9.3%, while hotels registered the greatest depreciation at -20.7%.

1All references to deal volume cited in this report are based on Real Capital Analytics transactional database, which includes entity-level and excludes development site.