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RCA’s Costello Says U.S. Deal Activity Coasts to Close Out 2018

The fourth quarter is normally the busiest time of the year, with investors looking to close deals before year-end, but in 2018 deal activity appears to be coasting to the finish line. Research by Real Capital Analytics’ (RCA) shows preliminary volume figures for November suggest a slowdown of investment activity, but 2018 volume is still far enough ahead that the annual total should be higher than last year.

RCA’s Jim Costello writes, “The slowdown in the fourth quarter is more pronounced in the single asset market. The sale of individual assets fell at double-digit rates in October and November on a year-over-year basis, preliminary data shows. Still, because of the strength earlier in the year, 2018 activity for such deals is coming in at a pace 3% higher than that seen through November 2017.”

Interestingly, portfolio and entity-level transactions are shaping up to be an important driver of deal activity both for November and the year overall. Preliminary figures for November suggest a 26% year-over-year pace of growth in such megadeals, says RCA. On top of the 40% pace of growth in these deals in October, Q4 may see an overall lift in deal volume largely because of megadeals.

RCA’s Elizabeth Szep points out that U.S. commercial property prices rose 7% in November from a year earlier, logging a steady pace of increase consistent with the sustained investment sales growth in 2018 so far. RCA’s US National All-Property Index rose 0.6% from a month prior.

Into the year-end, industrial, CBD office and retail properties are all experiencing a positive bump in growth, notes Szep. “Annual price growth for each of these three types has accelerated for at least the past three months,” she wrote.

RCA reports apartment prices rose 9% year-over-year, a slower rate of increase than posted in the first half of 2018, but still the fastest rate of growth among the property types, tied with suburban offices. Suburban offices have posted the strongest acceleration in price growth so far this year; at the start of 2018 they were increasing at a 4.6% year-over-year pace.

With year-to-date 2018 deal volume already ahead of the level set through November 2017, it would take a catastrophic December for the 2018 total not to surpass 2017 levels, notes Costello.

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About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency marketing communications roles. He is responsible for Connect’s client content operations and is involved in a range of initiatives ranging from content strategy, message development, copywriting, media relations, social media and content marketing services. In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. In addition to his vast commercial real estate experience, Dennis has worked on communications and launch strategies for a number of residential projects such as Disney’s Celebration in Florida, Ritter Ranch in Palmdale California (7,200 homes, 22,000 acres), WaterColor in Florida and PremierGarage in Phoenix. Dennis’s agency background included firms such as Idea Hall and Macy + Associates. He has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. Dennis has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements. Dennis has been involved in a host of charitable and community organizations including the American Cancer Society, Easter Seals, BoyScouts, Chrysalis Foundation, Freedom For Life, HOLA, L.A.’s BEST, Reach Out and Read, Super Bowl Host Committee, and Thunderbirds Charities.

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