U.S. commercial property sales soared in 2021 as investors snatched up warehouses, apartment buildings, resorts and hotels, and more, according to new data from Real Capital Analytics.
Commercial property sales reached a record high of $809 billion in 2021, nearly double 2020’s total. It also pushed ahead of the previous record set in 2019 of $600 billion.
"Everything's lining up for another strong year," Carly Tripp, head of real estate investments for Nuveen, a global investment manager, said to The Wall Street Journal about 2022.
Higher interest rates could prove the only pressing threat to another record year, analysts say.
Regardless, investors see another strong year for warehouses thanks to the growing e-commerce sector. Apartment building investments are expected to continue to offer accelerated rents from high demand. Also, leisure destinations are seeing a resurgence, which is sparking an increase in demand for resorts and vacation-oriented hotels.
Real estate and private equity investors are still flush with cash and banking on more commercial property investments in 2022, The Wall Street Journal reports. Demand also continues to grow for student housing, data centers, and medical office buildings. Sun Belt states that offer lower taxes, warm weather, and more affordable housing costs have also become target areas for investors.
Commercial real estate has posted a dramatic recovery ever since the beginning of the pandemic. 2021 marked a big turn for the sector, notably in the multifamily and industrial spaces, as well as a demonstrated resiliency within brick-and-mortar retail, according to the National Association of REALTORS®’ December 2021 Commercial Market Insights.
The most popular commercial property type last year proved to be rental apartments, as rising rents have kept investments growing. Multifamily sales totaled $335.3 billion, which marks a 128% surge compared to 2020, according to Real Capital. Industrial property came in second at $166.1 billion in sales, a 56% jump from 2020.
Source: “COVID-19 Fuels Best-Ever Commercial Real Estate Sales,” The Wall Street Journal (Jan. 25, 2022) [Log-in required.]