Aaron Jodka
- Investors allocated $111.7 billion across the major asset classes in Q3, a 15% jump compared to last year.
- Volume has increased for six straight quarters, and recent monthly totals have been revised upward.
- Office and retail lead in volume gains, while multifamily and industrial are tops for total dollars transacted.
- Hospitality was the only asset class to show a decline in Q3.
- Recent improvements in the interest rate environment should bolster activity through year-end.
Investment activity picked up in Q3, with growth accelerating from Q2. Volume increased 15%, and recent monthly totals have been revised upward. All asset classes, except hospitality, posted year-over-year gains. Single-asset deals are still the driving force in the market, while portfolio and entity deals remain subdued. Larger deals are beginning to transact again on a selective basis, a promising sign for future activity. The recent decline in the 10-year Treasury also bodes well for investment sales through year-end.
Office
Office leads all asset classes in volume gains, up 38% over the past year. In the third quarter, a total of $19.4 billion transacted. CBD activity is up 62% as larger deals begin to move again. There are signs that institutional capital is reentering the market, while cross-border sources are also selectively acquiring assets. Meanwhile, MSCI reports that office pricing rose 7.1% over the past 12 months. Manhattan remains the runaway leader for sales, up 84% on $7.1 billion in volume, with Dallas, San Jose, Los Angeles, and Houston rounding out the top five.
Industrial
Industrial is the second-leading asset class by volume, with $26.5 billion trading in Q3. Volume increased 8% on the year, with single-asset deals setting the pace, up 25%. Portfolio and entity deals remain restrained, down 29% compared to 2024. Pricing continues to escalate, up 4.0% year over year. Gains have been concentrated outside the core markets, per MSCI. Dallas leads the country in sales volume, with $5.5 billion transacted through Q3, followed by Houston, Los Angeles, Phoenix, and Atlanta. Several markets have set year-to-date records, including Houston, Charlotte, Nashville, Salt Lake City, and Fort Lauderdale.
Multifamily
With $43.8 billion in volume, multifamily is the clear-cut leader. Outside of year-end 2024, Q3 marks the strongest quarterly showing since 2022. MSCI reports that pricing has marginally declined, down 0.8% on the year. Similar to other asset classes, portfolio deals are down, while single-asset transactions are making the market. Dallas is the most heavily traded market, with $6.7 billion in year-to-date volume. Seattle, Los Angeles, Manhattan, and Atlanta follow, while San Jose has posted record volume through Q3.
Retail
Retail volume is up 24% year over year, with $16.3 billion trading in Q3. Centers are driving the bulk of this activity, up 40%, while shops have posted flat results. Retail bucks the trend, as both single-asset deals and portfolio and entity transactions have increased compared to last year and year to date. Pricing is on the rise, up 5.5%, the strongest of all property types. Los Angeles leads the nation in sales volume, up 61% with $3.5 billion in sales. Manhattan, Dallas, Phoenix, and Seattle rank second through fifth. Seattle and Portland posted record activity through Q3.
Hospitality
Hospitality is the lone asset class to post a volume decline in Q3. Single-asset trades were down slightly (3%), while portfolio and entity deals fell 54%. Pricing, however, is on the upswing, growing 3.9% over the past 12 months. Gains are strongest outside the major metros, according to MSCI estimates. Manhattan and Phoenix rank first and second for sales volume, with $1.2 billion and $1.1 billion, respectively. Atlanta, Denver, and Miami round out the top five. To date, Los Angeles and Nashville — markets that ranked in the top 10 last year — sit at 18th and 20th.
