Investment Volume Rebounds to Third Highest Q2 on Record

  • After four consecutive quarters of year-over-year decline, investment volume rebounded strongly in Q2 to $130.9 billion1—the third highest Q2 volume on record after 2019 and 2007. Volume was up 169.5% from the pandemic-era trough in Q2 2020.
  • Volume increased significantly across all sectors. In percentage terms, growth was strongest in the hotel sector, where price discounts and M&A activity boosted investment.
  • Private investors remained most active, but their market share fell by 3.6 percentage points from a year ago as institutional and public investors increased their activity.
  • Cap rates decreased year-over-year for nearly all sectors, with the largest decline for industrial (-19 bps). Office, hotel and multifamily cap rates declined by between 6 and 9 bps, while retail cap rates rose by 15 bps. However, these changes may be skewed by the relatively low level of transaction volume in Q2 2020.
  • Total annualized NCREIF return rose to 7.4% in Q2, up from 2.6% in Q1 and the strongest rate since 2016. Industrial, multifamily and office annualized returns increased from Q1. Retail and hotel annualized returns remained negative for the second consecutive quarter, but the decrease was much smaller than in Q1.

1 All references to deal volume cited in this report are based on Real Capital Analytics’ (RCA) client-facing transactional database, which includes entity-level and excludes development site transactions and confidential deals. RCA’s published volume totals are based on the company’s proprietary database, which includes confidential deals.