Current Status: Following a record-setting year in 2018, transaction volumes came back to earth in 1Q19, with $109 billion in sales during the first three months of the year – a 9.4% year-over year decline, according to Real Capital Analytics. Sales activity was flat or declined across all property types. Entity-level sales, which have propelled transaction volumes in recent quarters, were absent in the first quarter, contributing to the pullback in deal activity. Despite the overall decline in sales activity, transaction volume in a number of key secondary markets rose sharply.
Outlook: Despite rich pricing, real estate remains fairly valued relative to fixed income alternatives. Attractive spreads combined with still-healthy property market fundamentals should sustain sales activity.
YoY from Q1 2018
Current Status: A reflection of the heightened economic uncertainty and lower appetite for risk resulting from recent volatility, commercial lending standards tightened while demand for commercial mortgages softened over the previous three-month period, according to the Fed’s April 2019 Senior Loan Officer Opinion Survey.
Outlook: Tighter loans spreads and the intensifying competition to place debt will force lenders to move up the risk curve. This trend will be supported by the anticipated increase in demand for the financing of transitional assets in more peripheral markets and construction projects going forward.
This information is for our clients and investors only. Please note that the content of this report is for informational purposes only and should not be viewed as investment advice or an offer or solicitation. Any opinions are solely those of the Strategy and Research Team of CBRE Global Investors and are subject to change without notice, and may not be consistent with market trends or future events. This research is based on current public information that we consider reliable, but we do not represent it as accurate, updated or complete, and it should not be relied on as such.
Copyright © 2018, CBRE Global Investors, LLC. All rights reserved.