2023 CRE Deal Volume Down 51% from 2022

Article originally posted on HERE on January 25, 2024

Just $374 billion of commercial real estate sold in the U.S. last year, the Wall Street Journal reported Wednesday, citing data from MSCI Real Assets. That’s a 51% drop compared with 2022 and also 14% lower than in 2020, when prospective buyers couldn’t view buildings for most of the year because of COVID-19 lockdowns.

Cuurent circumstances would seem to bode well for an uptick in transaction volume in 2024. Investors have raised $240 billion to pour into U.S. real estate, reported the WSJ, based on dry powder data from Preqin.

However, the bid/ask gap is still too wide for many would-be buyers, according to the WSJ. MSCI data show that pricing on average has declined by 11% since the early-2022 peak. “Some real estate has certainly become a lot cheaper, but only the riskiest type,” such as CBD office.

“The slump in deal activity has echoes of what happened during the financial crisis, when some of the most profitable property deals in modern history were struck,” the WSJ reported. “But it would take a much more troubled economy to throw up similar bargains in 2024.”