May RCA Data

by | 24 June 2021

  • Multifamily continues to lead the charge with $10.5 billion in May volume, and 37% of all sales volume year-to-date.
  • Year-to-date volume is 15% below pre-pandemic averages. However, recent months have seen volume revisions, suggesting the market is stronger than those preliminary figures indicate.
  • RCA’s CPPI (price) index is showing gains for all asset types, with hotel flat. Multifamily and industrial lead the charge, at 10.1%, and 9.5%, respectively.
  • Multiple large-scale transactions are pending, offering volume upside in the months ahead.

Office

Investment in markets such as Manhattan and Washington, D.C., is showing signs of a rebound. Hines acquired 1015 Half Street Southeast in Washington, which was almost fully leased, for $220.1 million. In Manhattan, clothing retailer UNIQLO acquired its flagship store at 546 Broadway, which includes retail, and office space. There are other pending deals in Manhattan as well, signaling its return as the country’s highest-sales-volume market. Other major transactions were in Atlanta, Bellevue, West Palm Beach, and San Jose. Hines also has under contract PG&E’s headquarters in San Francisco, for a deal valued at about $800 million that requires approval from the California Public Utilities Commission. PG&E is relocating to Oakland.

Industrial

Portfolio sales are picking up. SREIT acquired a 14-property, 3.6-million-square-foot portfolio from Blackstone’s Link in the Reno, NV, area for nearly $400 million. TPG Real Estate bought a 16-property portfolio with 15 industrial assets for $320 million. The properties are in the Seattle and San Francisco areas. Multiple life science assets listed as flex properties also traded, including deals in Waltham, MA, and Emeryville, CA. The announcement that Equity Commonwealth will acquire Monmouth REIT’s 24.5 million SF operations for $3.4 billion will further boost sales volumes throughout the year and into 2022.

Multifamily

Multifamily remains the most liquid asset class, with investors driving cap rates ever lower and pricing to record highs. Multiple $100 million-plus deals closed in May, including a two-property portfolio with 1,297 units in Maryland that sold for $331.5 million to FPA Multifamily. A three-property portfolio with 824 units in Phoenix traded to Benedict Canyon Equities for $143.9 million. Population-growth corridors remain the top investment markets, with additional sales in Arizona, Florida, Colorado, Nevada, Tennessee, and California headlining deals in May. Volume will get another jolt from the $1 billion, 5,800-unit Conrad Prebys portfolio trade, a joint venture between Blackstone, TruAmerica Multifamily, and Guardian Life Insurance for the San Diego-area properties.

Retail

Retail investments remain heavily skewed to grocery-anchored centers. Benderson Development acquired a 28-property portfolio throughout the Pacific Northwest and Alaska, totaling 4.5 million square feet and including new 25-year leases signed by Fred Meyer. Other grocery-anchored properties sold in California, Texas, and Massachusetts. The largest single-asset retail sale since the COVID-19 pandemic closed in May — a $218.6 million joint venture of Big V Properties, Kimco, and Equity Street Capital for the 1.1- million-square-foot The Rim in San Antonio. It traded for $204 per square foot, at a quoted 7.3% cap rate. In Revere, MA, Amazon acquired a former Showcase Cinema for $49.8 million to redevelop into a new distribution center.

Hotel

Hotel sales are picking up as travel, both for leisure and business, is in recovery mode. The largest deals in May included the 175-room JW Marriott Santa Monica Le Merigot for $75 million, the 175-room Aloft Santa Clara in San Jose for $54 million, and the 100-room Z NYC Hotel in Queens for $38.4 million. The Lexington New York City, a 712-room hotel closed since March 2020, is under contract to DiamondRock Hospitality for $185 million.