- Multifamily and industrial led all asset types in sales volume, with sales volumes of $7.5 billion and $5.2 billion, respectively.
- Aggregate January volume of $21.1 billion was 58% lower than January 2020 volumes.
- Retail and hotel posted the largest annual volume differences, down 73% from January 2020.
- Several pending deals that have yet to close will offer upside for volume going forward.
As 2020 drew to a close, aggregate sales volumes had returned to normal: fourth quarter volume was ahead of the average quarterly volume from 2018 through 2019. After a record December, volumes in January, unsurprisingly, cooled. The new year has kicked off with several high-profile deals, supporting the notion that the investment sales market is back.
Office volumes totaled $3.5 billion in January, down 69% from 2020 levels. The biggest transactions were in growth markets, the three largest of the month being in West Palm Beach, FL ($281.9 million); Charlotte, NC ($201 million); and Raleigh, NC ($175.1 million). Related Companies, which acquired Phillips Point in West Palm Beach and is rumored to be under contract on other assets nearby, is also developing a new Class A building. This signifies major investment in West Palm, which has benefitted from in-migration as a result of the pandemic. More headline deals took place in Culver City, CA; Charlotte, NC; The Woodlands, TX; and Phoenix, AZ.
Pending trades offer further optimism, as a $1.5 billion multi-property sale in Boston, to Alexandria Real Estate Equities, will push volumes up in the near-term. Likewise, Crescent RE Holdings’ acquisition of The Crescent in Dallas with Goff Capital Partners is also due to hit the sales tallies soon.
Industrial remains in high demand. Investors want to expand their portfolios this year and see industrial as an optimal choice. January volumes rang in at $5.2 billion, down 57% year-over-year.
The largest deal of the month came from BREIT, which purchased a partial interest in a 31-property portfolio from LBA Realty in the U.S. Mountain/West regions for $918 million. BREIT’s purchase of a second portfolio, along the West Coast and Arizona – also from LBA Realty – was for a clear majority interest (85%) for $644 million. Continuing with the theme of portfolios, Exeter acquired 22 assets in the Midwest and Southeastern U.S. from Colony Capital for $331 million (one office property was included).
The multifamily market had no large-scale portfolio sales to kick off the year, but that didn’t stop it from being the top asset class for investment volumes. January volume of $7.5 billion represented a 53% decline from 2020. Eight trades topped $100 million in the month, the largest being REEFF America’s acquisition of Hyde Square in Bellevue, WA, for $279.1 million. This was also one of the higher per-unit sales ($451,618/unit), and deals in New York (15 Park Row Apartments, $438,923/unit) and downtown Los Angeles (OLiVE DTLA, $412,969/unit) also crested $400,000/unit in the $100 million-plus category.
Other leading transactions were spread throughout the country in Virginia, Georgia, Illinois, Massachusetts, Arizona, New Jersey, and Florida.
Retail volumes continue to fluctuate, though net lease transactions remain popular. The largest deal in January was Oak Street RE’s 12-property sale-leaseback deal for Walgreens locations in Florida, Arizona, Texas, and New Mexico. Pricing wasn’t available on all deals, but those reported averaged $5 million per location. Overall volume for the month came in at $1.4 billion, a decrease of 73% from one-year prior.
Other top transactions were led by the New York/New Jersey market, where 712 Madison Avenue traded for $43 million ($6,759/SF) when the tenant, Graff Diamonds, purchased it for occupancy. This property sold at the end of 2018 for $32.2 million, indicating that there is still demand for high-street retail in Manhattan. Other area sales also included properties in New York City as well as in Slingerlands, NY; Sewell, NJ; and Bloomfield, NJ.
Two pending deals will bump up sales volumes upon closing, headlined by The Rim in San Antonio, TX. This 1.1 million SF power center is reportedly under contract for $219.8 million ($205/SF) to Big V Properties.
Hotel sales started the year with $600 million in volume, a decline of 73% from January 2020. However, two properties sold for above $100 million in the month. In the largest deal, ASAP International on behalf of a Chinese investor acquired the Marriott LaGuardia Airport in Queens, NY. This 443-room property, renovated for $30 million in 2018, sold for $132.8 million. In the other major deal, Property Reserve acquired the 2016-built, 364-room Hilton Garden Inn/Homewood Suites in San Diego, CA, for $126.1 million.
Other January deals occurred throughout the country in Florida, Massachusetts, Oregon, California, Illinois, and Arizona (for deals above $10 million).