Key facts
- Hotel prices decreased by 9.3% year-over-year in June.
- Apartment values declined by 1.7%, and industrial property values slipped by 0.4%.
- Suburban office prices increased by 3% year-over-year in June.
- Total transaction volume reached $136.6 billion in June, a 14% increase from the previous year.
- Portfolio sales, a significant portion of activity, rose by 38% year-over-year.
Commercial real estate sectors are diverging in their pricing trends, moving away from a unified market dynamic. In June, hotel prices saw a significant year-over-year decline of 9.3%, while apartment values slid by 1.7% and industrial properties experienced their first negative reading at a 0.4% decrease. In contrast, suburban office prices rose by 3% year-over-year, making them the top performer for the month.
MSCI analysts noted that property types are now being priced based on their individual fundamentals rather than being driven by broader financial sector movements. Despite these divergences, overall transaction volume in June reached $136.6 billion, a 14% increase from the previous year. This growth was largely fueled by entity-level and portfolio sales, which were up 38% year-over-year, accounting for a quarter of the month's activity.
MSCI Chief Economist Jim Costello indicated that while dealmaking is healthy and better than last year, the pace of transactions in the latter half of the year might underperform compared to 2023. He suggested that structural issues in capital raising and deployment point to a weaker trend than initially suggested by the published figures, though not a market collapse.
Major U.S. investment hubs like Boston, Chicago, Los Angeles, New York, San Francisco, and Washington, D.C., attracted 47% of U.S. investment. Multifamily assets drew the most capital with $36.7 billion in sales, followed by industrial assets at $32.5 billion. Data center investments also saw a substantial increase in deal volume, up 1,806% from last year.