Each quarter, the commercial real estate institution CBRE releases its U.S. Capital Markets Figures report, which analyzes where capital was invested.
So, who’s investing in what? Here are my top 9 takeaways from CBRE’s Q1 2021 capital market report:
The total investment volume was $92.4 billion, which does represent a reduction. However, a strong recovery is expected in the second half of 2021.
38.5% of capital was invested in multifamily and 22.2% was invested in industrial.
Topping the list were Greater New York (-49.8%), San Francisco Bay area (-46.6%), Greater Washington DC (-49.6%), Seattle (-50.5%), Chicago (-45.1%), and Houston (-56.9%). Markets in the top 20 that were more resilient include Boston (-17.0%), Phoenix (-27.8%) and Raleigh/Durham (-25.6%).
Office investment increased by 347.6% in Richmond and by 23.5% in Raleigh/Durham. Industrial investment increased by 30.7% in Boston. Multifamily investment increased by 63.7% in Indianapolis, by 17.2% in Jacksonville, and by 13.0% in Charlotte. Hotel investment increased by 161.0% in Modesto, by 90.9% in Hawaii, and by 43.0% in Austin.
This represents a 9% increase compared to a year ago. Market share also grew for institutional investors (22.8% in Q1 2020 to 26.3% in Q1 2021) and foreign investors (6.3% in Q1 2020 to 7.6% in Q1 2021). Conversely, REITs experienced a 75% YoY decline in investment volume.
Multifamily cap rates fell by 21 bps to 5.0% and industrial cap rates fell by 20 bps to 6.03%.
The annualized NCREIF total return increased from 1.6% in Q1 2020 to 2.6% in Q1 of 2021 but is still below the average NCREIF for Q1 2010 to Q1 2019 of 10.2%.
Fannie Mae (51.4%), Freddie Mac (40.4%), and HUD (56.6%) experienced large increases.
However, all delinquency rates remained low compared to last cycle.
Click here to download CBRE’s full report.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.