Report points to improving conditions despite historic lows in transaction volumes
The commercial real estate market experienced another quarter of declining transactions, but the pace of the downturn has slowed, suggesting an improving financing environment and growing optimism.
This was among the key findings in Altus Group's inaugural Transactions & Investments Quarterly Report, which analyzed national transaction activity for the third quarter of 2024.
According to the report, commercial real estate transactions in the totaled $40.1 billion in Q3 2024, down from $43.0 billion in Q2 2024 and $44.4 billion in Q3 2023. The number of properties sold dropped 10% compared to the previous quarter, with transaction dollar volume falling by 6.6% and total square footage transacted decreasing by 3.8%.
Cole Perry, associate director of Research at Altus Group, noted that while transaction activity continued to decline, the rate of decline showed signs of stabilization.
“[This] potentially reflects an improving financing environment and increased optimism,” Perry said. “Interestingly, 10 of the 15 property sub-sectors saw a positive quarter-over-quarter price growth per square foot, led by mixed-use, manufacturing, automotive and office properties. The granularity of our data provides valuable insights, helping CRE professionals stay on top of trends and identify the sectors that will lead the market recovery.”
Altus Group’s data revealed sector-specific nuances, with mixed-use, manufacturing, and automotive properties leading the way in quarter-over-quarter price growth.
Average prices per square foot for transacted properties rose 1.2% from Q2 2024, with all sectors except hospitality seeing increases. Hospitality properties recorded a 2.6% decline.
Multifamily properties accounted for the largest share of transactions in Q3 2024, contributing $12.2 billion (30.4%) of the total dollar volume. The industrial sector followed with $9.9 billion (24.7%), while office and retail properties contributed $8.0 billion (20.0%) and $6.1 billion (15.3%), respectively.
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Year-over-year multifamily transaction volumes dropped 11% in Q3 2024 compared to the same period in 2023, a significant improvement from the 33% decline recorded the previous year. Similarly, industrial transactions fell 6%, down from a 31% drop in 2023. Retail and office properties also showed moderated declines.
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