Dallas Leads Q1 for U.S. Commercial Real Estate Investment – Commercial Observer

U.S. commercial real estate investment volume grew 55.6% year-over-year in the first quarter of 2022 to $170.8 billion, according to by Newmark first quarter u.s. capital markets report. Total sales volume was the highest on record in the first quarter, surpassing the record volume of 2007. Low interest rates, demand for alternative property types and Sun Belt’s fast-growing markets were the main contributors to the increase.

Dallas led all markets with investment volume of $12.6 billion, up 119% year-over-year. It was followed by New York, Los Angeles, Miami, Phoenix and Washington, DC, respectively. Major markets were attractive due to trophy office products and a more positive outlook for retail and hospitality.

Las Vegas, up 300% year over year, had the highest annual percentage gain of the nation’s 30 largest investment markets. Vegas made the biggest deal of the quarter, a $4 billion acquisition by VICI properties of the land and real estate assets of the Venetian Resort Las Vegas and the Venetian Expo and Convention Center Las Vegas from Sands. Two markets – Boston and San Francisco – posted declines from a year earlier.

Multifamily was the most popular property type, with sales of $63 billion in the first quarter.

Higher-than-expected inflation should favor property types that typically have shorter rental terms, such as multi-family buildings and self-storage units. Other property types that typically favor long-term leases, such as industrial buildings, have attracted higher prices with shorter lease terms as buyers can raise asking rents to take advantage of rent growth and inflation.

Conversely, triple net leased properties that have been coveted over the past two years due to stable returns in a low interest rate environment are most at risk from the impact of inflation. The report notes that these properties have the longest lease terms, averaging 10.3 years, and that lease revisions are generally fixed, although they may be tied to the consumer price index.

David Nusbaum can be reached at [email protected].

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