U.S. commercial real estate deals reached a record high of US$809 billion last year as the market rebounded from the depths of the pandemic, according to Real Capital Analytics.
Investor appetites for apartments and industrial properties were largely behind the surge, the firm said in a report Thursday.
Values jumped a record-high 23 per cent across Real Capital's index -- encompassing office, industrial, retail and apartment properties. While a bounce-back from "panic-induced pricing" in 2020 accounted for some of the increase, income growth for warehouses and apartments has pushed investors to pay more for those assets, the firm said. Office prices also saw some gains, driven largely by suburban properties.
Demand for commercial real estate soared in the past year as investors got more optimistic about the U.S. recovery. With more people getting vaccinated, companies started to bring workers back to offices, retail and tourism traffic grew and apartment occupancies climbed.
Markets with large concentrations of multifamily and industrial properties saw more traction. Dallas held the top spot for investment, while Manhattan ranked ninth, its worst position ever, according to the report.
"With uncertainty still plaguing the office sector, and its industrial needs outsourced to neighbouring markets, Manhattan is fundamentally not structured to land atop the ranks," Real Capital said. - Bloomberg