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Investment Sales Keep Declining

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According to a Colliers summary based on MSCI data, declines—significant in some asset classes—dominated investment sales in November.

According to the firm’s Research Director for U.S. Capital Markets, Aaron Jodka, retail did the best, declining barely 10% month over month. Office’s sales volume of just $2.8 billion in 2023 set a new monthly low. It is 54% less than it was last year. Colliers stated that very few CBD properties were traded.

“Distress is visible, with multiple properties selling for less than $100 per square foot,” according to Jodka.

A joint venture paid $185 million to acquire the Bala Plaza in Lower Merion, Pennsylvania, which was the biggest sale of November. The deal’s underwritten cap rate was 7.7%.

In Industrial, the lowest total sales number can only be seen in February 2014. Colliers estimated the value at $3 billion, with a 52% decrease in volume from October. The market was driven, it claimed, by smaller portfolio deals.

The highest transaction saw Rockpoint paying $142.5 million buying 1.4 million square feet of space across seven properties in the Dallas-Fort Worth area.

According to Colliers, multifamily was “not a strong month” either. Sales volume decreased 38% month over month and by 68% when compared to the previous year. Most deals were driven by newer assets.

Properties in Atlanta, Charlotte, Oviedo, Florida, Glendale, Arizona, and recently delivered properties (2022 or 2023) were exchanged. At a 5.5% cap rate, the Atlanta asset sold for $444,118 per unit. The article states that a 2020-built property in Santa Maria, California, sold at a 6% cap rate.

November’s trade volume of $3.4 billion is just 32% less than the year’s total retail volume.

The purchase of the former Neiman Marcus in New York’s Hudson Yards by Wells Fargo for $321.7 million, or $804 per square foot, was the biggest deal of the month.

“Previous reports had the sale price at $550 million and Wells Fargo plans to use the space as an office,” Jodka wrote.

November hospitality revenue was $1.3 billion, which is 69% less than the same month last year. The volume also decreased by 20% from October to November, with the amount of houses sold “reminiscent of pandemic-era activity.”

The 196-room Hilton Brooklyn New York, which sold for $105 million, or $535,714 per room, was the only real estate to reach the $100 million threshold in November. The property was purchased by Ohana Real Estate Investors from Frank Inc.

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