The latest market stats from Real Capital Analytics (RCA) show that investment sales volumes are back to normal. Q2 volume of $136.7 billion was 10% ahead of the quarterly average from 2014–19 ($124.1 billion). Q2 volume increased nearly 40% over Q1’s, well above the typical Q1-to-Q2 jump, and each asset type posted quarter-to-quarter gains. While aggregate totals are back to normal, the property types’ shares of that volume are very different now. Multifamily continues to garner a larger share of total volume than historical trends, 39% in Q2, instead of a 32% average from 2014–19. Industrial has commanded 22% of all volume, six percentage points above its historical average. The biggest difference remains in sales of office: Its 19% market share is nearly 10 percentage points below normal. Signs are pointing to office rebounding, offering more upside to future sales figures.


While office’s recovery is the slowest for the major property types, quarterly volume increased 21% and year-over-year sales grew 92%. Manhattan made a return in June with $1.1 billion in sales, nearly doubling its year-to-date volume. This is important news: because it’s the historical top investment sales market, its rebound is essential to a broader office volume recovery. Chicago returning to headline deals is also promising, Miami has gained traction throughout the pandemic, and LinkedIn’s purchase of its headquarters signals its need for physical space. Key June transactions in these markets include 1KFulton in Chicago, which traded for $354.9 million ($668 per square foot at a 4.2% cap rate), Miami Center for $325 million ($415 per square foot), and LinkedIn’s Sunnyvale headquarters for $323 million ($1,122 per square foot).


Industrial continues to perform well despite a lack of major portfolio sales. Quarterly volume was up 35%, year-over-year sales more than doubled, and Q2 volume was 44% ahead of the same period in 2019. These investment trends are expected to hold, since fundamentals are healthy, new development continues, and rents are rising. Major June deals were highlighted by single-tenant assets. A Toyo Tire facility in Ontario, CA, sold for $184.2 million ($242 per square foot), an Amazon and Cyxtera warehouse and data center in Irvine, CA, sold for $180.8 million ($457 per square foot, at a 3.8% cap rate), while an Amazon fulfillment center in Haines City, FL, sold for $170 million ($158 per square foot).


Multifamily remains the clear sales leader of property types. Volume topped $52 billion in Q2, one of the highest non-Q4 totals on record, with properties drawing nearly four of every 10 dollars invested. Quarterly volume increased 34% while year-over-year volume has more than tripled. The largest June deal was for a 16-property portfolio of 5,300 units, mostly in the Southeast and Southwest, sold for $1.2 billion to Starwood Capital. The Sky Residences in New York (1,176 units) traded for $858 million ($729,677/unit), while the Palomino Park Apartments in Highlands Ranch, CO (1,184 units), sold for $435 million ($367,400/unit).


Retail sales volume is starting to wake up. Quarterly volume of $13.7 billion was up 49% from Q1 and has more than doubled from year-ago figures. Shopping centers are starting to trade again as improved economic conditions are trickling down to investment sales. Top deals in June included the 925,000-square-foot Grossmont Shopping Center in La Mesa, CA, for $169.6 million ($183 per square foot). In Phoenix, the Camelback Colonnade, a 621,000-square-foot center, traded for $162.5 million ($262 per square foot). In both cases the seller retained an interest. In Lakewood, CO, the 747,000-square-foot Belmar Center sold for $113 million ($151 per square foot, at a reported 8.3% cap rate on next year’s income). The center, 85% occupied, sold for less than its 2015 price of $209.9 million.


Hotel volume has grown the most, coming off the smallest base — less than $1 billion traded in Q2 last year. Blackstone and Starwood Capital Group’s acquisition of Extended Stay America drove the bulk of the second quarter’s (and all of 2021’s) volume. Deals are getting done. Monarch Alternative Capital acquired a nine-property portfolio from Eagle Hospitality Trust for $324.7 million, with 2,801 rooms in properties spread throughout the U.S. and concentrated in California and Colorado. Other top deals included the Hyatt Regency Lost Pines Resort & Spa in Cedar Creek/Red Rock, TX ($275 million, $560,081 per room), and the Montage Palmetto Bluff in Bluffton, SC ($224 million, $1.1 million per room), which was sold to South Street Partners and Henderson Park Capital Partners. While the luxury resort was front and center, the entire property consists of 20,000 acres and future development is planned.