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High Prices Challenge Acquisition Plans
Total U.S. investment deal activity is likely to be down for 2017 relative to 2016. For the year through November, deal volume is down 9% compared to the same period in 2016. Preliminary data from Real Capital Analytics (RCA), suggests a 35% year-over-year decline for the month of November.
Acquisition activity is a challenge for many commercial real estate investors, given the cyclically high prices, but other strategies are being used to place capital, such as construction. Institutional investors are facing difficulty putting capital to work in the current market. Although they are buying new assets, they are selling far more, and their pace of new construction is nowhere near enough to offset their disposition activity.
RCA’s Jim Costello says, “From where the market is at today, we would need to see deal activity total $100 billion in December for 2017 to equal the volume seen in 2016. Every client we talk with is busy finishing up deals, but they are not $100-billion-a-month busy.”
The strongest December ever was in 2015, when deal volume hit $75 billion.
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Sale/Acquisition
