Auction.com report: Commercial real estate deal volume hits new high in first quarter

Graphic courtesy of Auction.com

Graphic courtesy of Auction.com

by Dan Rafter

Auction.com recently shared some good news with commercial real estate pros: According to the company’s first-quarter Commercial Real Estate Market Monitor, the commercial real estate industry is in the middle of a strong recovery.

Auction.com reported that commercial real estate deal volume in the first quarter hit a new all-time high of $124.3 billion. That’s an impressive increase of 47.4 percent from a year ago and a jump of 0.1 percent from the fourth quarter of 2014.

Just the fact that commercial real estate deal volumes increased at all from the fourth quarter to the first is impressive: As Auction.com says in its report, most investors seek to wrap up their transactions in the fourth quarter, before the tax year comes to an end. That usually means at least some dip in transactions in the first quarter.

But not this year. Auction.com says that thi sis the first time that real estate deal volumes have risen at all from the fourth quarter to the first quarter since 2007.

“Investors continue to drive up market prices and compress cap rates, which suggests that they’re probably ahead of what the underlying fundamentals would support, especially in some of the hotter markets and sectors,” said Rick Sharga, executive vice president of Auction.com, in a written statement.

Sharga said that the strength of the commercial real estate industry today is a result of the high availability of capital and low interest rates. He pointed, too, at the continuing influx of foreign capital into commercial real estate. Investors from China and Singapore in particular have boosted their investment in commercial real estate. Sharga cited the $1.95 billion purchase of the Waldorf Astoria in Manhattan by Chinese firm Anbang Insurance Company as a noteworthy example.

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