Monday Morning Scoop - Here Are the Five Top Markets for CRE Transactions

Here Are the Five Top Markets for CRE Transactions

A market can be big, relatively robust, and still have had the stuffing kicked out of it. That’s the overall good news/bad news of MSCI’s take on U.S. 2023 capital trends in commercial real estate. This isn’t surprising when the main thrust of the larger report was that end-of-year 2023 trends don’t bode well for 2024.

“All 25 of the most active U.S. markets of 2023 experienced large double-digit declines in transaction volume for the year,” the firm wrote. “Single asset sales made up a majority of the activity that did occur, with 20 of the top locales logging at least 80% of their volume in individual transactions.”

For several years, Dallas had been a top target for CRE investment dollars. That’s something that hasn’t changed. For the third year in a row, MSCI found Dallas at the top of the transaction heap. Almost half of the nearly $18.8 billion in sales were in multifamily. It was the only single category where Dallas was also on top. However, volume was down 58% from 2022.

Second of the top five was Los Angeles, at $17.1 billion, down 47% year over year. The metro was also number 2 last year and number 3 in 2021. Its largest markets were in industrial and multifamily.

Manhattan was a come-back kid at number 3. In 2022, it was number 6, and number 9 in 2021. The roughly $12.1 billion was 45% lower than in 2022, with office the largest single category.

Next, Chicago, number 4, was in seventh place in 2021 and 2022. The $11.9 billion in transactions was 44% off last year’s pace. Multifamily and industrial were the two largest property sectors in the area.

Rounding out the top five is Atlanta. That’s down from number 3 in 2022 and number two in 2021. Multifamily was the biggest portion of the $11.5 billion, which was off from 2022 by 62%.

Some other points that MSCI highlighted were San Antonio’s first time in the top 25 with $800 million out of the $4.5 billion being one property.

“Seattle posted the largest drop in ranking, down 12 places to the no. 20 spot,” they wrote. “Seattle has consistently been in the top 10 in years past, but volume in the market tumbled 72% relative to 2022. The other big mover down the list was Orlando, which slid to the no. 22 position in 2023 from no. 14 in 2022. Declines in the apartment market drove this drop, with multifamily volume in Orlando falling 76% versus the prior year.”

By: Erik Sherman
Source: GlobeStreet