U.S. Market Snapshot Capital Markets | Q1 2021 - Colliers
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
U.S. Capital Markets Snapshot | Q1 2021
Capital Markets | Q1 2021
U.S.
Market Snapshot
U.S. Capital Markets Snapshot | Q1 2021
Overview
The U.S. investment sales market showed strength and resiliency in the first Quarterly Pricing Quarterly Pricing
Direction Forecast
three months of the year. Sustained interest in both industrial and multifamily
asset classes compressed cap rates, while office and retail remained stable. Multifamily
Aggregate pricing was up 7.8% year-over-year and investment volume
reached $96.7 billion. While lower than Q1 2020 volume, data across multiple Office
asset classes demonstrates we are on an accelerated road to recovery.
Industrial
Investors faced higher prices for all asset types and a return to the workplace and have kept asking rates
lower cap rates due to positive sentiment and favorable stable, providing concessions as a bridge to anticipated Retail
financing terms. Industrial assets experienced the demand.
greatest pricing gains. Multiple March industrial sales
The retail sector is seeing more interest as restrictions
achieved sub-4% cap rates in the Southwest, while
ease across the nation. Rent collections are nearing
portfolio sales were limited.
pre-pandemic levels and absorption doubled quarter-
Multifamily continues to thrive and accounted for more over-quarter. Grocery-anchored shopping centers and
than a third of sales volume in Q1. Favorable migration essential-service-providing net leased retail assets
Q1 2020 vs Q1 2021 Q1 2020 vs Q1 2021
patterns drove apartment rents in Arizona, Florida and remain in high demand.
Texas, and investor interest in multifamily was greatest
Distress has been limited and financing terms remain $45
across the Southeast and Southwest. $40
favorable. Institutional investors chasing yield focused $35
Transactions in tech-centric markets in the West show on specialized sub asset types. Lab and life science, cold $30
Volume (bn)
stability in office sector pricing despite record breaking storage and medical office thrived in all markets. Under- $25
$20
vacancies. Office sales were heavily skewed to single allocated pension funds and increased international
$15
tenant assets and life science transactions accounted capital flows are expected to further propel sales $10
for the bulk of office sales volume. Owners anticipate volumes throughout 2021. $5
$0
David Amsterdam Q1 2020 Q1 2021
Aaron Jodka
President, U.S. Capital Markets and
Director of Research, U.S. Capital Markets Source: Real Capital Analytics, Colliers
Northeast Region
Aaron.Jodka@colliers.com
David.Amsterdam@colliers.com
+1 617 330 8059
+1 212 716 3556
U.S. Capital Markets Snapshot | Q1 2021
Click on the below to view the
specific asset classes
Multifamily Office Industrial
Retail Specialized Contacts
Asset Classes
U.S. Capital Markets Snapshot | Q1 2021
Multifamily
$35.5 Billion
Quarterly Volume
Positive momentum continues for multifamily pricing and transaction volume.
Compressed returns and outbound migration in urban cores are driving investors
towards secondary and tertiary markets. New developments offer opportunities to
investors willing to take on leasing and stabilization.
7.1%
Year-over-year Price Change
The Southeast and Southwest remained highly Manhattan remain affected by early policies and
active due to the availability of product, strong pandemic lock downs. Owners offered favorable
demand drivers and rent growth. Favorable concession packages and Q1 showed early signs
Tricon Recapitalization
migration and demographic patterns continued of renters returning to the city. The easing of
in these regions over the past year, and Dallas, restrictions in states such as California and New
Phoenix and Atlanta led the country in total sales York should attract investment dollars back to
Largest Q1 Deal | $1.3 Billion | 23 Properties |
volume. New York and New Jersey rank among the markets affected by the pandemic.
highest states for outbound moves and, as a result, 7,300 Units | Southeast/Southwest
Demand for multifamily product is leading
the Northeast experienced the largest decrease in
investors to consider new developments still in
regional sales volume.
lease-up. Positive sentiment is driving bidders to
Core coastal markets such as San Francisco and pay stabilized pricing for these opportunities.
Top Markets
Top migration states Dallas, Texas | Phoenix, Arizona | Atlanta, Georgia
ID NY
What to Watch
NJ Pre-sales | New Construction | Migration Patterns
IL MD
Inbound Outbound
CA
Arizona (AZ) California (CA)
NC
TN
AZ Idaho (ID) Illinois (IL)
SC Will Mathews | Multifamily Lead
North Carolina (NC) Maryland (MD) U.S. Capital Markets Board of Advisors
TX Tennessee (TN) New Jersey (NJ) Will.Mathews@colliers.com
+1 404 877 9285
Texas (TX) New York (NY)
South Carolina (SC)U.S. Capital Markets Snapshot | Q1 2021
Office
$20.5 Billion
Quarterly Volume
Sales transactions remained limited, but pricing held firm in Q1. Record-breaking
negative net absorption drove investors towards long-term, single-tenant assets. The
sublease growth rate decelerated and sentiment surrounding a return to the workplace
is positive. Signs of expansion, particularly from tech tenants, are promising.
2.9%
Year-over-year Price Change
Negative absorption and an increase in both subsector hub leader. These assets trade at high
vacancy and sublease rates has placed downward prices, supporting the broader office market. The
pressure on valuations. Owners believe current two largest office deals this year were life science
market conditions are temporary and are holding
onto their assets, and long-term leased properties
transactions in Boston.
Manhattan, the largest office market in the country,
Brookfield Life
are trading at high valuations. As a result, a
decrease in pricing has not been realized. Recent
experienced one of the weakest sales quarters on Science Portfolio
record. New York City, and other metros that rely
deals in tech-centric markets like San Francisco Largest Q1 Deal | $3.4 Billion | 13 Properties |
on public transportation, may benefit from the new
and Seattle demonstrate this trend. Tech 2.2 Million SF | Northeast/Mid-Atlantic
administration’s proposed infrastructure spending,
companies are favoring face-to-face interaction,
particularly on transit systems.
calling employees back to the office, and heavily
investing in physical footprints. Boston and San Absorption losses were evenly distributed between Top Markets
Francisco are the top tech sales markets year-to- downtown and suburban markets, but central
date, followed by Los Angeles, Seattle, and San business districts reported higher vacancies. Boston, Massachusetts | San Francisco, California |
Jose. Market fundamentals and limited new lease Los Angeles, California
comparables make long-term, single-tenant assets
Life science investments have driven overall office
most desirable.
volume in Q1, and Boston has emerged as the
What to Watch
Life Science | Tech’s Return to Office | Manhattan
Post-Pandemic Tech Expansions
Amazon Apple Facebook Microsoft Google Frank Petz | Office Lead
U.S. Capital Markets Board of Advisors
Size: 3.8M+ SF 1.2M+ SF 1.2M+ SF 1.1M+ SF 660,000+ SF Frank.Petz@colliers.com
+1 617 330 8123U.S. Capital Markets Snapshot | Q1 2021
Industrial
$19.6 Billion
Quarterly Volume
Demand remains strong among both existing and new investors in the industrial
sector. Portfolio shares allocated to industrial assets are growing, and experienced
investors are showing increased interest in the infrastructure, data center and cold
storage subsectors. While the appetite for large portfolio sales remains, opportunities
were limited, and year-over-year volume decreased as a result. 9.1%
Year-over-year Price Change
Industrial rental rates have grown and sales few options for growth. Amazon and other
pricing followed suit. Cap rates continued to e-commerce-related tenant demand will continue
compress in Q1 and have reached sub-4% in select
markets across the U.S. Investors are favoring key
to make the market dynamic.
LBA Portfolio
Surging e-commerce and shifting consumer
distribution networks in Atlanta, Chicago, Dallas, Largest Q1 Deal | $1.4 Billion | 40 Properties |
habits make both bulk distribution centers and
and Los Angeles/Inland Empire. These markets
infill locations attractive to investors. The median 9.5 Million SF | Nationwide (this is a true national portfolio)
reach a wide share of the U.S. population in
industrial price per square foot has never been
addition to their own large local population base,
higher, and rising rents have led developers to
and have led year-to-date sales volumes.
break ground on the next wave of product. 73.2
Overall net absorption in Q1 hit a new record million square feet of new product was delivered in Top Markets
for the industrial sector. Key submarkets with Q1 and deliveries are projected to increase as the
supply and demand imbalances have left tenants year progresses. Los Angeles, California | Inland Empire, California |
Chicago, Illinois
Industrial sub-4% cap rate deals
What to Watch
Address SF $/SF Cap Rate Buyer Seller
Sub-4% Cap Rates | Amazon | New Construction
5240 W Buckeye Rd
221,885 $126 3.7% KKR Lincoln Property Co
Phoenix, Arizona
20730 Prairie St PGIM Real Estate, Xebec
221,800 $334 3.7% Intercontinental RE
Los Angeles, California Realty Partners
Michael Kendall | Industrial Lead
4021 W 108 St U.S. Capital Markets Board of Advisors
273,590 $178 3.7% Terreno Realty Flagler Dev (Fortress)
Hialeah, Florida Michael.Kendall@colliers.com
+1 949 724 5545U.S. Capital Markets Snapshot | Q1 2021
Retail
$7.8 Billion
Quarterly Volume
Fundamentals show signs of recovery and pricing has held firm against pre-pandemic
figures. Absorption doubled over Q4 2020 and rent collections are now just three
percentage points below Q1 2020. Grocery-anchored shopping centers remain a
popular choice for investors. Distress in the sector becomes less likely as vaccines are
distributed and consumption increases. 0.2%
Year-over-year Price Change
Essential-service-providing retail and assets in consumption. Activity is increasing across all retail
regions with eased restrictions drove investor outlets except movie theaters. Investors have been
interest, but a lack of major transactions and waiting for big discounts which have yet to surface
portfolio offerings muted overall volume. outside of select distressed debt plays, and a
significant increase in further distress opportunities
Paradise Valley Mall
Strong retailers have leveraged last year’s market
may not arise. Largest Q1 Deal | $100 Million | Phoenix, Arizona
disruption to expand or upgrade their locations
to better centers. Discount retailers, mass The sector continues to prove resilient. Retail
merchandisers, and home improvement stores has evolved numerous times, and current
have evolved to provide conveniences that support redevelopment opportunities will allow investors to
e-commerce and an omnichannel approach. shape the next generation of the retail experience.
Investors’ top choices will be growth markets with
Top Markets
The government’s economic stimulus and
affordable costs of living and high barriers to entry. Dallas, Texas | Phoenix, Arizona |
softening of restrictions has led to an increase in
Los Angeles, California
What to Watch
The Retail Evolution Consumer Spending | Potential Distress |
67.1% 78.5%
of retailers report a desire of retailers plan to Asset Repositioning
to open new stores or add or extend in-store
test new configurations services to support an
to address changing omnichannel approach.
El Warner | Retail Lead
consumer habits.
U.S. Capital Markets Board of Advisors
El.Warner@colliers.com
Source: Colliers and GlobalData Retail
+1 949 724 5690U.S. Capital Markets Snapshot | Q1 2021
Specialized asset classes
Emerging demographic and economic trends have transformed formerly niche subsectors into widely accepted institutional investment options. The lack
of opportunities, particularly in industrial and multifamily, has further driven interest towards well-performing specialized asset classes. As a result,
institutional capital flows to lab and life science, cold storage, and medical office have increased.
Record-high venture capital spending, COVID-19 research and strong IPO activity are driving Top two specialized assets and their locations
price growth in the office and industrial lab sectors. Lab properties are heavily concentrated
in markets such as Boston, San Francisco, and San Diego, but are increasingly gaining
traction in Raleigh/Durham, New York City, and Seattle.
Cold storage is transforming as shifting consumer habits drive a new last-mile need. New
demands and home delivery expectations mark the “last mile of food” as the next frontier, MA
causing growth in institutional interest. While suppliers are still early in the optimization of NY
moving product from bulk cold storage to consumers’ homes, increased infrastructure has
driven pricing on new modern cold storage buildings close to that of modern dry buildings,
assuming similar credit and term.
CA
The aging population has increased the need for medical services and medical office is a key
NC
beneficiary. Fundamentals remain healthy and rents continue to rise, protecting this niche
product from the investment pause of the greater office asset class. Institutional investment
in the medical office sector made up 35% of medical office sales in the early months of 2021,
up from only 12% in 2019. TX
Typical multifamily subsectors like senior and student housing were negatively affected
by the pandemic, but a new niche of multifamily is emerging in their place: single family
home rentals. The pricing increase as a result of today’s low interest rate environment
and the growing down payment required to purchase a single-family residence has left
home ownership prohibitive to many millennials. Pandemic lockdowns and work-from-
home requirements have further pushed the desire of single professionals and families for Lab Cold Storage
more space. Single family rentals, larger unit sizes and remote locations have become key
commodities. To meet this demand, more groups have begun investing in and developing California (CA) California (CA)
this specialized asset class.
Massachusetts (MA) New York (NY)
The recent attention in specialized asset classes has caused both pricing and sales volumes
to rise. Developers have taken notice and are planning for the next wave of construction by
acquiring appropriately zoned land and development sites. North Carolina (NC) Texas (TX)U.S. Capital Markets Snapshot | Q1 2021
Contacts
For more information please use the contact details below:
David Amsterdam Aaron Jodka
President, U.S. Capital Markets and Northeast Region Director of Research, U.S. Capital Markets
David.Amsterdam@colliers.com Aaron.Jodka@colliers.com
+1 212 716 3556 +1 617 330 8059
U.S. Capital Markets Board of Advisors
Will Mathews El Warner
Multifamily Lead Retail Lead
Will.Mathews@colliers.com El.Warner@colliers.com
+1 404 877 9285 +1 949 724 5690
Frank Petz Peter Nicoletti
Office Lead Portfolio Sales
Frank.Petz@colliers.com Peter.Nicoletti@colliers.com
+1 617 330 8123 +1 212 716 3620
Michael Kendall Jeff Black
Industrial Lead Debt & Equity
Michael.Kendall@colliers.com Jeff.Black@colliers.com
+1 949 724 5545 +1 617 330 8049U.S. Capital Markets Snapshot | Q1 2021
The world of Colliers
View our other recent
Market Snapshots
by clicking on the
images:
Annualized Revenue Established in Managing APAC
$3.3B 67 2B
(US$) Countries (square feet)
EMEA
Lease/sale transactions Assets under management Comprised of
54,000 $40B 18,000+
(professionals)
All stats are for 2020, are in U.S. dollars and include affiliates
Data Disclaimer
This report gives information based primarily on Colliers International data, which may be helpful in anticipating trends in the property sector. However, no warranty is given
as to the accuracy of, and no liability for negligence is accepted in relation to, the forecasts, figures or conclusions contained in this report and they must not be relied on for
investment or any other purposes. This report does not constitute and must not be treated as investment or valuation advice or an offer to buy or sell property.
For the latest news from Colliers, visit Colliers.com or follow us on Twitter: @Colliers and LinkedIn.
© 2021. All rights reserved
Colliers International
1114 Sixth Avenue
New York, NY 10036You can also read
