New Stat City: Global Investment Sales Shrank 60 Percent in ’08

More awesome commercial real estate news, this time by way of Real Capital Analytics, which just released its 2008 year-in-review report. The thrust of the report is this: Worldwide, only $504 billion in commercial property sales took place in 2008, a drop of nearly 60 percent compared to the year before.

The United States holds the distinction of serving as “the epicenter for the office meltdown, with a decrease of 76 percent [year over year] in sales volume.”

On a more local level, New York City’s market tanked, its spot as No. 1 in the office market rankings slipping a notch, while Tokyo jumped from No. 7 in ’07 to the top spot in ’08.

Moreover, in the hotel sector, the New York City metro area saw an 86 percent drop in transactions, falling from the No. 1 market spot in ’07 to the No. 6 in ’08.

One spot of not-so-bad news? The New York metropolitan area did retain its No. 2 spot in the retail markets ranking, with London taking the No. 1 spot (and L.A. falling nine spots from 2007 to No. 10 in ’08.)

More stats:

  • In 2007, all of the largest 50 deals worldwide were valued at more than $1 billion. In 2008, only 19 surpassed the $1 billion mark. (The GM Building sale took the No. 1 spot at $2.8 billion.
  • So much for international investment! According to the report, “Global capital flows turned sharply inward in the final quarter of 2008.”
  • Hotels, of course, fared worse than most other sectors, falling 75 percent in transaction volume. In contrast, development site acquisitions fell 31 percent, apartment building transactions fell 51 percent, retail transactions fell 50 percent, industrial 78 percent, and office properties 54 percent.

All the news is not somber, thankfully.

Despite the drop in volume, New York City beat out its international competitors as far as overall commercial property sales are concerned, with $24.9 billion in volume in 2008. London had $24.6 billion, and Tokyo $23.9 billion.

Now that 2008 has been covered, what does the future hold?

The wonks at RCA anticipate many fewer portfolio transactions, many more investors interested in taking partial interests in prime assets, more owner/occupier transactions, more note sales, and at some point in the future, distressed sales: the “growth potential in this arena is huge.”

But our favorite part of the report is this delightful tidbit:

“What is trading now?

The easy answer: Nothing.”


New Stat City: Global Investment Sales Shrank 60 Percent in ’08