Uncovering Opportunity in Uncertainty
The COVID-19 pandemic created unprecedented challenges for U.S. investment sales, but the market was resilient, showing signs of renewed life within months. Colliers is tracking three important trends that have emerged:
- Minimized risk: Investors are shifting focus to term and credit.
- Specialized assets: Institutional capital has pushed into lab, cold storage, data centers and medical office.
- Demographics: Consumer habits have caused a surge in e-commerce activity, and capital is following demographic and migration patterns.
First quarter readings for 2021 show volumes above Q2 and Q3 2020, signaling that the investment sales market is rebounding. Recent months and quarters have seen substantial volume revisions to the upside, suggesting aggregate sales will settle higher. March 2021 volume was up 27% compared to the prior year, and pricing has increased across all major asset classes. Cap rates have been stable in office and retail, while they’ve compressed in industrial and multifamily.
Favorable finance rates, along with near-record capital, under-allocated pension funds, and other institutional investors, increased inflation expectations, and potential tax changes should further propel sales volumes through 2021.