March Marks Slowest Month For CRE Transactions In Nearly A Year

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March marked the slowest month in nearly a year for commercial real estate (CRE) transactions, with deal activity dropping 3.9%, according to the latest SitusAMC Insights report. Most property sectors saw a decline, with the exception of industrial and hotel assets.

Despite the overall slowdown, there are early signs of a market rebound. The report notes that CRE returns rose by nearly 40 basis points in Q1, reaching their highest level in almost three years. While income returns held steady, they remained near their strongest point since 2016—suggesting that CRE continues to offer a stable income stream.

In today’s unpredictable financial environment, CRE is increasingly viewed as a safe-haven asset, the report said. Investor interest in the sector remained strong throughout the first quarter, bolstered by the perceived stability of real estate amid ongoing high interest rates.

Multifamily properties (apartments) have particularly caught investors’ attention, thanks to their consistent cash flow potential. However, lingering uncertainty—especially around the broader economic outlook and potential policy shifts under former President Trump—has made many investors cautious.

The shift in sentiment was evident in investor recommendations: those advising to hold CRE assets jumped to 70% in Q1 (up 14 percentage points), while those recommending a buy dropped to 23%—erasing gains seen at the end of last year. Selling sentiment also declined, dropping from 11% to 7%.

For the second quarter in a row, CRE posted positive annualized returns, clocking in at 2.7%—the highest since mid-2022. Meanwhile, cap and discount rates remained stable during the first quarter, based on SitusAMC’s proprietary investment data.

Adding to the cautious optimism, new supply across most property types is slowing—a trend that could support future rent increases. Office and retail completions hit record lows, industrial supply was at its smallest level in ten years, and new apartment construction fell to its lowest point since 2015.

 

Source:  GlobeSt.

 

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