Investment Sales Surge 18% to $113B as CRE Regains Footing
Investment sales are at their highest levels in three years and on par with 2017–2018 levels, according to a first-quarter report from Avison Young. The dollar total hit $112.6 billion in the three months through March, representing an 18% year-over-year increase.
By transaction count, the number was 6,800, a 7.71% increase from Q1 2025. The average cap rate was down by five basis points to 6.44%.
The firm said this is a sign that the CRE transaction market has found its footing, an environment where "disciplined buyers with dry powder tend to do well before the crowd fully returns." Avison Young applied predictive modeling to historical averages to estimate that the sales volume of the second through fourth quarters would be approximately $497 billion, bringing the yearly total to between $585 billion and $590 billion.
An important caveat is that the estimate assumes two cuts in the federal funds rate by the Federal Reserve, which at this point is not a given. Some Fed officials have even warned of possible rate hikes ahead and cautious optimism from banks about CRE lending in January started fading by April.
The firm looks at details of 15 key growth markets: New York Metro ($8.70 billion, 494 sales); Los Angeles ($7.59 billion, 474 sales); San Francisco Bay ($6.15 billion, 256 sales); Dallas-Fort Worth ($4.46 billion, 202 sales); Washington, D.C. ($4.40 billion, 118 sales); South Florida ($4.28 billion, 244 sales); Chicago ($4.01 billion, 211 sales); Atlanta ($3.83 billion, 215 sales); Houston ($3.26 billion, 232 sales); Phoenix ($2.58 billion, 156 sales); Boston ($1.68 billion, 119 sales); Charlotte ($1.65 billion, 83 sales); Austin ($1.50 billion, 51 sales); Denver ($1.15 billion, 87 sales) and Nashville ($970 million, 73 sales).
The investment sales market varied by property type. Office saw $20.5 billion in sales (38.6% gain), a count of 1,159 deals (8% gain) and an average cap rate of 7.35% (drop of 35 basis points).
Retail saw $17.8 billion in sales (2.8% gain), a count of 1,449 deals (9.27% drop) and an average cap rate of 6.85% (drop of 12 basis points). The major headwind is consumer sentiment. The tailwind is accredited anchor tenants.
Multifamily saw $32.1 billion in sales (0.5% gain), a count of 1,558 deals (2% gain) and an average cap rate of 6.03% (increase of 31 basis points). High-supply markets are the headwind, with tailwinds coming from the tough home-buying landscape.
Industrial saw $31.1 billion in sales (27.3% gain), a count of 2,124 deals (7.71% gain) and an average cap rate of 6.70% (increase of 34 basis points). Trade uncertainty is a headwind; e-commerce is a tailwind.
Development saw $11.1 billion in sales (55% gain), a count of 510 deals (drop of 8.11%), with cap rates that were unavailable. Construction financing and equity are the headwinds, with data centers providing a strong tailwind.
Source: GlobeSt/ALM