Current Status: Through 3Q19, the sharp decline in entity sales was partially offset by rising single-asset and portfolio sales, resulting in only a slight decline in year-to-date transaction volumes. The still-elevated sales activity speaks to the appetite among U.S. investors, particularly given the broad decline in cross-border sales in 2019. Excluding entity-level sales, year-to-date sales activity rose by 10% in comparison to same period in 2018. Despite the contraction in sales activity, 2019 will be another banner year for U.S. commercial real estate transactions.
Outlook: The combination of strong property fundamentals across most property sectors and accommodative capital markets environment will maintain elevated sales activity. The low interest rate environment and resulting reduction in hedging costs, combined with continued income growth, should attract greater cross-border investment going forward.
YoY from Q3 2018
Current Status: Lending standards continued to tighten into the latter part of 2019, while demand for loans rose spurred by reduced debt costs and the rebound in transaction activity following a lackluster first half of the year, according to the Fed’s October 2019 Senior Loan Officer Opinion Survey.
Outlook: Despite the still-healthy demand for commercial real estate debt, indications of slowing economic growth ahead combined with recent volatility should prompt further tightening of underwriting standards.
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