In the second quarter of this year, commercial real estate investment volume increased 3.4 percent year over year to $121.5 billion, according to CBRE’s “Q2 2019: U.S. Capital Markets” report. That figure was the highest second-quarter total since 2015. Meanwhile, individual asset sales volume increased 9.3 percent to $91.2 billion, which was the highest second-quarter total since 2004, when the earliest data is available. The report includes multifamily, office, industrial, retail and hotels in its data set.
However, by comparison, the report showed that hotels did not fare as well. In the second quarter of 2019, the sector saw all types of acquisitions decrease 39.3 percent year over year, from $9.4 billion in volume to $5.7 billion during the quarter. The story was similar for individual asset sales of hotels, which decreased 22.2 percent year over year during the second quarter, from $5.9 billion in volume last year to $4.6 billion this year.
The Where
When looking at dollar amounts, the greater New York area saw the largest hotel deal volume at approximately $5.7 billion in the year ending Q2 2019, which was a 90 percent year-over-year increase, according to CBRE. But San Antonio saw the largest year-over-year increase in terms of percent change. The market experienced a 685.4-percent increase in deal volume to $837 million during the same time period.
Meanwhile, of the markets measured in the report, Nashville experienced the lowest hotel deal volume in terms of dollars. The city netted deal volume of $489 million in the year ending Q2 2019, which was still a 126.1-percent year-over-year increase. In terms of percent change, Chicago saw the slowest growth at 75.3 percent to $986 million.
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The Who
According to the report, private investors were doing the majority of commercial real estate acquisitions, handling $66.5 billion in deal volume during the second quarter of 2019, representing 7.8-percent growth over the previous year’s quarter. Real estate investment trusts/public companies saw a sharp 77.7-percent increase in investment, with these companies representing $12.7 billion of volume this year compared to $7.2 billion in Q2 2018. Meanwhile, institutional investors left the game somewhat. These investors decreased their investment 4.9 percent, from $30.7 billion in Q2 2018 to $25 billion during the quarter this year.
Cross-border investors, however, saw the steepest decline (-47.5 percent to $9.5 billion in Q2 2019), according to CBRE. Canada remained the largest source of foreign capital for U.S. real estate, more than 10 times that of the next-largest-contributing country, comprising $41.3 billion in the year ending Q2 2019. Singapore followed with $4 billion in U.S. investment volume.
RCA Commercial Property Price Index – Hotel Sector
|
June 2019 |
June 2018 |
2007 Peak |
June ’19 vs. ’07 |
YOY Change |
|
114 |
111 |
111 |
+2.9% |
+2.4% |
Source: CBRE Research, Real Capital Analytics, Q2 2019. The RCA CPPI is a suite of price indices developed and published by Real Capital Analytics. They are transaction-based and measure commercial real estate price movements using repeat-sales regression methodology. Sales are indexed from December 2006.