High borrowing costs and interest rates continued to batter the U.S. commercial real estate market in July despite early signs of pricing stabilization. According to a recent report from Colliers, the volume of investment deals in July declined by 15% year-over-year, totaling $21 billion. Investment volumes for industrial, multifamily, and retail properties dropped by double digits, with industrial properties seeing the steepest decline at 33%. Multifamily sales fell by 11% to $7.5 billion.
"Individual [retail] deals drove July's volume, headlined by the sale of Country Club Plaza in Kansas City for $175.3 million," Colliers reported.
"Simon Property Group and Macerich sold the asset to Ray W. Washburne. In Manhattan, Bando E&C acquired the retail condo at 2 Times Square for $99.3 million, or $3,817 per square foot, continuing the city's retail hot streak. In Orlando, Lee Vista Promenade traded for $68.5 million."
Office property sales volume increased by 13% to $3.4 billion, though pricing declined 12% year-over-year. The rise in volume was driven by Healthpeak's sale of a medical portfolio of 59 assets for $674 million. Other notable office sales in July included 180 Maiden Lane in Manhattan for $297 million and 777 Tower in Los Angeles for $120 million.
Hospitality property sales in July rose by 2% to $1.7 billion, though pricing fell by 7%. A total of 84 hospitality assets were sold—the lowest number in the past four years. The largest individual transaction was the sale of a 452-room property in Hawaii from Blackstone to Host Hotels for $725 million. Although 1,300 properties were sold in July, Colliers found that the average deal size is returning to 2016-2019 levels. Still, the overall decline in transaction volume underscores the persistent impact of high borrowing costs and interest rates on the market.