Commercial Real Estate Transactions in U.S. Plunged 71% in April
Commercial Real Estate Transactions in U.S. Plunged 71% in April
(Bloomberg) -- Sales of U.S. hotels, offices, malls and other commercial real estate plunged 71% in April to the lowest level in a decade, as the coronavirus shut down large parts of the economy, according to Real Capital Analytics Inc.
Transactions fell to $11 billion, the smallest volume since April 2010, according to the report Wednesday by the New York-based firm. Hotel deals led the collapse, plummeting 98% from a year earlier. Office and industrial deal volume fell 60% from a year earlier.
“Liquidity in the hotel market has all but evaporated,” a team led by Senior Vice President Jim Costello said in the report. “Sales began dipping even before the Covid-19 crisis hit, and, pummeled by the economic shutdown and travel bans, only eight hotels changed hands in April. This is the fewest number of hotel transactions recorded in any month in the history of RCA’s coverage.”
Other report highlights:
- The speed of the pullback in liquidity is likely to help investors find a floor for prices faster this cycle.
- The excess of dry powder also should shorten the recovery period. It took six years for prices to bounce back after the 2008 Wall Street crisis.
- Prices have held up so far with an index of industrial, office, retail and apartment properties 6.5% above year-ago levels.
- Non-bank lenders are likely to face the largest losses this cycle, because they furnished a bigger share of capital than in the last crisis, when commercial mortgage-backed securities suffered the biggest losses.
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