Commercial Real Estate Sales Fall 24% to $39.1 Billion

Article originally posted on CoStar on June 26, 2020

Property sales have slowed as investors proceed with caution during the coronavirus pandemic. (Getty Images)

Commercial real estate pricing dropped during a dramatic slowdown in transaction volume during the coronavirus pandemic, according to the latest monthly CoStar Commercial Repeat Sale Indices.

The repeat sales of $39.1 billion for the first five months of 2020 fell 24.2% from the same time a year earlier. This is the first look at the year’s commercial real estate pricing trends, calculated by using the price change from the pair of first and second sales of properties sold multiple times. The indices are based on 538 repeat sales in May and more than 227,324 since 1996.

“While volume generally held up well versus the prior year in the first three months of 2020, it dropped more precipitously in April and May, reflecting overall caution among investors as well as physical challenges in transacting deals in a lockdown,” said Nancy Muscatello, managing consultant for CoStar. “The deceleration in deal volume was felt across the size and building-quality spectrum.”

In the investment-grade property segment, repeat sales volume was down 25.1% in the first five months of 2020 compared to the same time a year earlier. The group reflects larger asset sales common in major markets.

The general commercial segment, which reflects the more numerous but lower-priced property sales typical of secondary and smaller markets, was down 22.4%.

Both of the two major composite price indices declined in May, reflecting investor uncertainty and slower deal volume. However, both indices were still up between 3% to 5% on an annual basis over more than two decades.

The equal-weighted U.S. Composite Index, which reflects the more numerous, but lower-priced property sales typical of secondary and smaller markets, fell 1.3% but was still up over time.

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