Reversal of Fortune? U.S. Property Markets Stage Partial Come Back

Let the good times roll — we aren’t done yet. Sales transactions in U.S. commercial property markets picked up in the first half of 2018 (1H 2018). Though the gains were modest, amounting to just 4% over the first half of 2017, year-over-year transaction volumes rose in two consecutive quarters for the first time since late 2015, after falling in seven of the prior eight quarters. And sales of trophy and other high-priced assets faired even better, jumping almost 9% in 1H 2018.

The news has not been uniformly favorable. Trades of office properties in suburban and especially downtown locations have dropped considerably, while sales in all sectors aside from industrial are well off cyclical highs reached in 2015, now three years ago.

Nonetheless, overall demand for U.S. property remains robust. Neither trade tensions between the U.S. and its leading trading partners nor rising interest rates seem to be impacting foreign demand for U.S. property. Though China continues to offload recent acquisitions and pull back from new purchases, offshore demand has grown much more than domestic demand.

Key takeaways from this report include:

For more insights, explore the 2018 Capital Flows Midyear Update.