US real estate deal activity breaks records in 2021 fourth quarter, year

Transaction volume for full year hits all-time high, rising 88% to nearly $809 billion.

Deal activity in the US real estate market skyrocketed 80 percent to record levels in the fourth quarter of last year compared with the same period pre-pandemic in 2019, according to Real Capital Analytics.

Transaction volume reached an all-time high of $808.7 billion for the full year, marking an 88 percent year-over-year increase, according to the report. This figure is nearly double 2020’s total and surpassed the previous record in 2019 of about $600 billion.

But although optimism around income growth and relatively stable yields generated “a frenzy of activity,” driving total sales for the quarter to a record $325.6 billion, there were still pockets of weakness, the research firm said in its Capital Trends report.

The apartment sector constituted the largest and most liquid portion of the US market, representing 42 percent of all deal activity, according to the report. In a departure from pre-pandemic trends, smaller markets captured 80 percent of investment activity in the apartment sector, RCA said, due to themes surrounding cost structures and remote work.

Industrial was the next largest sector, with 21 percent of all investment activity, according to RCA. Despite concerns surrounding supply chains and changes in consumer needs, the report said investors remain optimistic about income growth for the industrial sector.

Offices accounted for the third-largest sector, with 17 percent of all investment activity, while retail and hotel represented just 9 percent and 5 percent respectively, according to RCA. Record volumes also pushed US commercial property prices to a record in 2021, rising 22.9 percent from the previous year and 9.8 percent from the third to fourth quarter this year, according to RCA.

Real Capital Analytics is a research firm focused on the commercial real estate investment markets.