Intelligent Investment

Investor Interest in Purchasing Commercial Real Estate Surpasses 2019 Levels

CBRE Deal Flow Indicator

21 Dec 2021 5 Minute Read

CBRE Deal Flow—the company’s proprietary digital marketing hub for U.S. commercial property sales—indicates that investor inquiries (confidentiality agreements signed by prospective buyers) through the first week of December 2021 have surpassed the total for all of 2019. Robust investor interest in the second half of the year fueled this strength, with inquiries up 40% year-over-year from July 1 through December 8 and 14% compared with the same period in 2019 (Figure 1).

Investor Activity Picks Up in Most Challenged Sectors

Strong investor interest continued despite increased uncertainty due to rising COVID-19 infections and a reduction in the Federal Reserve’s bond purchasing program.

Retail inquiries surged more than 87% since 2020 and were slightly above 2019 levels. The hotel and office sectors also saw increases from 2020 but were down by 5% and 20%, respectively, from pre-pandemic 2019 levels. Multifamily and industrial inquiries continued their momentum from the past year with increases of 31% and 48%, respectively, compared with the same period in 2020. The pickup in investor inquiries coincides with an increase in investment transaction volume, which has also surpassed 2019 levels.

Figure 1: Percent Change in Investor Inquiries (July 1 to December 8)


Deal-Flow-Indicator-FIgure-1
Source: CBRE Deal Flow, December 2021.

Days on the Market Decreasing

Also striking a positive note is a decrease in the average number of days on the market for property sale listings (Figure 2). Property listings came off the market faster in the hotel, industrial, multifamily and office sectors than they did in the same period last year. Retail listings saw a 3% increase in average number of days on the market.

Although improved compared with 2020, most sectors saw listings stay on the market longer than in the comparable pre-pandemic 2019 period, with retail listing longevity up by 22%, followed by hotel listings up 11% and office by 9%. Days on the market were nearly the same for multifamily compared with pre-pandemic levels, while industrial had a 10% decrease.

Figure 2: Percent Change in Property Listing Days on the Market (July 1 to December 8)


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Source: CBRE Deal Flow, December 2021.

Positive Outlook Despite Uncertainty

CBRE expects continued strong investment activity in 2022. Total investment volume is expected to increase between 5% and 10% over 2021 levels. There are potential headwinds, such as a more hawkish Fed and a Q1 surge in COVID cases due to the omicron variant. Nevertheless, the economy is expected to grow by 4.6% in 2022. Strong economic growth will fuel continued improvement in property market fundamentals and embolden investor confidence. For CBRE’s full 2022 Real Estate Market Outlook, click here.

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