Third Quarter Sales Volume Declines, as Investors Grapple with High Pricing
October 28, 2019 | NREI Staff | National Real Estate Investor
Evidence continues to mount that real estate investors are becoming more cautious as investment sales volume in the third quarter fell 6.0 percent compared to the year prior, to $151 billion, according to research firm Real Capital Analytics (RCA). However in two of the sectors RCA tracks—industrial and hotel—sales volumes rose by double digits relative to the same period in 2018.
Industrial sales volume in the third quarter rose by a whopping 63 percent compared to the same period in 2018—to $40.6 billion. The increase in volume coincided with both an increase in the number of properties sold (by 11 percent vs. the prior year) and an uptick in RCA’s Commercial Property Price Index (CPPI) for industrial assets, by 11.9 percent. Cap rates in the sector compressed 10 basis points during the quarter, to an average of 6.3 percent. Industrial REITs have been especially aggressive in buying portfolios and completing M&As. The fourth quarter numbers promise to be robust as well, with the recent news that ProLogis is buying competitor Liberty Property Trust in a $12.6 billion deal.
