CRE sales hit record $809B in 2021

Multifamily and industrial sales led sectors with $335.3B and $166B, respectively

(iStock)
(iStock)

The commercial real estate market didn’t simply bounce back from a rough 2020 — it soared to record sales in 2021.

Commercial property sales totaled $809 billion in 2021, a record for the industry, according to Real Capital Analytics data reported by the Wall Street Journal. The sales volume was almost double that of 2020 and easily outpaced 2019’s record of approximately $600 billion.

Apartment buildings and industrial real estate were the market’s hottest sectors. Multifamily sales easily led the way with $335.3 billion of sales, a 128 percent jump year-over-year, according to Real Capital. The booming industrial real estate sector finished a distant second, totaling $166.1 billion in sales, still a 56 percent gain from 2020.

Some sectors came out as relative losers, as hotel sales reached $44.5 billion in 2021, according to Real Capital, more than doubling its 2020 level but falling short of recent highs. Office buildings, plagued by remote work policies and waves of new coronavirus cases, also came up short of records, hitting $139.2 billion.

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Widespread movement out of major coastal cities like San Francisco and New York City towards the Sun Belt markets sapped the historical centers of growth in favor of emerging areas.

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Real Capital reported Manhattan totaled $18.7 billion in sales last year, ranking ninth in the nation; typically, the borough ranks closer to the top of the list each year.

“It’s never been like that,” Real Capital senior vice president Jim Costello told the Journal. “Manhattan has just fallen off the map relative to its size.”

The Sun Belt eclipsed Manhattan in terms of growth. Dallas led the way with $48.9 billion in sales in 2021, followed by Atlanta with $37.1 billion in sales as investors looked towards suburban office buildings along with multifamily and industrial properties.

“There are certain geographies that look to be winners on the office side,” Stuart Rothstein of Apollo Global Management told the Journal.

Commercial property notched several records in 2021, according to various reports on the market. Overall, analytics firm Green Street reported the value of properties owned by REITs rose 24 percent in 2021 and hit a record in December. Additionally, a record $690 billion in commercial property loans were made in 2021, up 2.1 percent from 2019 and 8.7 percent trom 2020, according to Trepp.

[WSJ] — Holden Walter-Warner