One of the emerging narratives of the summer of 2024 was the slow but steady rebound in the CRE market. Sharply lower Treasury yields, tighter lending spreads, and the anticipated Fed rate cuts—finally realized in September—helped boost optimism.
Treasury Yield Tempers Enthusiasm But…
From mid-September to late October, Treasury yields steadily climbed, particularly on the long end of the curve. Between the Fed’s 50-basis point rate cut and Halloween, the 10-year yield rose nearly 70 basis points.
This rise seemed to cool some enthusiasm in October, as indicated by the LightBox CRE Activity Index—a measure tracking new property sale listings, appraisal procurements, and environmental due diligence requests, which serve as a leading indicator of deal activity—showing a rare decline for 2024. That seemed to zap a little energy from the CRE market.
But the dip in momentum didn’t extend to large-check CRE sales. In fact, significantly more nine-digit CRE sales took place in October than during the prior months.
A Promising Sign for CRE
In October alone, there were 53 sales of $100 million or more—an increase from 29 in September and 24 in August. The average purchase price for those 53 sales was almost $186 million—up slightly from $185 million in September. Interestingly, the list includes land sales where the sale is expected to result in commercial development.
Beyond the 53 big-ticket deals in October, another 52 transactions fell between $50 million and $100 million.
The news is particularly encouraging given recent challenges, from rising Treasury yields and hurricane recovery efforts in parts of the U.S. to October’s spike in volatility and potential buyer hesitation amid the U.S. election cycle.
The top announced trade was the sale of 1,900 acres in Fort Myers, FL to the Martin Marietta Company. The firm paid $620 million for what is expected to be a rock mining development.
In more traditional CRE sales, the W South Beach was sold by Tricap and RFR Holdings to the Reuben Brothers for $425 million.
Other big sales included the $322 million purchase of Waterford Lakes Town Center in Orlando by Kimco and the sale of 1,000 affordable housing units by the Black Spruce Portfolio in NYC for $400 million.
Download the full list of “big” buyers and tune in to our podcast, The CRE Weekly Digest, for more commentary on early dealmaking news and emerging opportunities.
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