Commercial real estate dealmaking slows again in November
A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and emerging opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. become a member to receive future editions straight to your inbox.
There was activity in the commercial real estate market for the second consecutive month in November.
Deal volume was 10% lower than in November 2024, with only 1,800 deals completed in total, according to monthly data provided by Moody’s as a media exclusive to CNBC’s Property Play. It tracks the top 50 commercial real estate sales across the U.S. in key segments such as multifamily, office, industrial, retail and hotel.
October was the first month to see negative growth in transaction volume on an annual basis since the post-Fed rate hike recovery began in early 2024, but this was not just a continuation of this trend. November transactions were even lower than November 2020, the first year of the Covid outbreak.
“This is driven by a combination of longer periods of higher interest rates, policy uncertainty, a weak labor market and caution on the part of CRE lenders and investors,” said Kevin Fagan, Moody’s head of CRE capital markets research. “But market liquidity is still selectively open at two-thirds of what it was before the pandemic, and there is greater concentration.”
Investors are moving towards larger-scale acquisitions and larger, higher-quality assets. For example, all transaction sizes fell significantly during the month, except for sales over $100 million, which were up 51% compared to the same period last year. This increased average transaction volume to $14.2 million in November, up from an average of $12 million since the beginning of 2019. Additionally, the majority of assets in the top 50 sales were Class A.
Industry highlights
“This month’s trade is consistent with recent weightlifting efforts focusing on persistent trends such as housing, logistics and digital infrastructure demand,” Fagan said.
Multifamily recorded the majority of transactions in November, recording 20 transactions, followed by office with 11 transactions and industrial with eight transactions.
Fagan noted that there has been a “general loosening” in office agreements, and that the market process for determining the real, fair price has become more efficient, faster and more reliable.
He also said he sees a story emerging in almost all of the office deals in the top 50: “Offices are either being purchased for mission-critical facilities because they have some specific use, there are conversion opportunities, or they come at discounted prices.”
The Office is located at 114 West 41st St. in New York City, which was purchased by Axonic Capital from Clarion Partners at a 53% discount to the previous sale. continued to see some great discount deals such as.
Companies are also increasingly focusing on the most basic office features. They want more control over where they operate and how much they pay for real estate, especially given today’s discounted prices.
Examples of this include Novartis’ purchase of a large campus-style facility in Durham, North Carolina, First Citizens’ purchase in San Francisco, and Alo Yoga’s purchase and occupancy in Beverly Hills, California.
The medical office we recently featured in this newsletter continues to see excessive activity due to strong demand. It was not included in Moody’s core count, but it was the biggest sales of November.
A $7.2 billion medical office portfolio consisting of 296 properties in 34 states has been sold by Welltower to a joint venture of Remedy Medical Properties and Kayne Anderson Real Estate. The acquisition makes the partnership the nation’s largest owner of outpatient medical buildings, with 1,104 properties in 44 states, Remedy said.
Large portfolio deals like this were a defining feature of the November report, accounting for 17 of the top 50 deals, according to Fagan; This is a trend that has increased in recent years compared to before the pandemic.
Data centers, one of today’s hottest CRE sectors, certainly had a big November. The second-largest sale of the month involves three industrial properties totaling $615 million. SDC Capital Partners purchased 97 acres of land in Leesburg, Virginia, earmarked for data center development.
