CRE Deal Flow Returns To Historical Levels

(credit m, heschmeyer, co-star)

The dollar volume of commercial real estatesales vaulted back to longterm historical levels in 2011. CoStar Group has confirmed $291.6 billion in CRE sales in 2011, a 32% increase over the sales volume in 2010.

Last year’s volume bested the 12-year average volume of $254.2 billion. However, the 2011 dollar volume is still overshadowed by credit-bubble level of $560.5 billion in 2007.

Sales of office property led all other types in dollar volume totaling almost $74 billion. That volume was 39% higher than 2010, but it was only one-third the volume of office sales in 2007.

Nine New York City office building sales that traded for more than $500 million each accounted for $6 billion of the total office sales volume in 2011 or 8%. The largest sale in any category last year was RXR Realty’s $920 million purchase of the the Starrett-Lehigh Building at 601 W 26th St. in New York, a 2.7 million-square-foot property.

While office sales led the way, perhaps the big winner in 2011 was multifamily sales. Apartment sales jumped 46% to $62.1 billion, about two-thirds of the 2007 volume.

Retail sales also had a strong year, jumping 43% from 2010 levels to $58.7 billion. That volume, however, was only one-fourth the sales volume for retail property in 2007.

Industrial property sales were up 8% from 2010 and totaled $35.9 billion. That volume was a little more than half the level of 2007.

Hospitality property sales were up 32% from 2010 to $20.9 billion and were about half of what they were in 2007.

Land sales of $19.6 billion were the disappointment of 2011. After increasing in 2010 from 2009 levels, land sales decreased 14% in 2011 from 2010 levels. Land sales peaked in 2005 at $62.2 billion and had fallen every year until 2010.

Interest in health care related real estate helped boost the catch all category of ‘Other property types,’ which jumped 76% from 2010 activity. The $20.5 billion of sales in this category include sales of specialty, health care and sports & entertainment related venues. Health care related property sales made up roughly one-fourth of the volume.

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