Office Stands Apart as CRE Hits Lowest Deal Count Since 2011

As reported in GlobeSt, national CRE deal activity has plunged to levels not seen since 2011, according to a new report from Altus Group.

The Altus report analyzed single-property, non-distressed sales across multifamily, industrial, office, retail, hospitality, and mixed-use sectors.

By The Numbers

The data revealed widespread contraction, with 2024 marking:

• The lowest transaction count since 2011.
• The lowest cumulative dollar volume since 2013.
• The lowest square footage transacted since 2010.

Despite these declines, the all-sector average PSF price rose 1.2% from Q2 to Q3 but was still down 1.6% on a YoY basis.

Parsing The Trends

The CRE  market showed little cause for optimism in Q3, with most sectors posting significant declines across multiple metrics.

Mixed Quarterly Signals

Most asset classes stumbled, with multifamily transactions plunging 12.3%, office down 11.5%, and retail and industrial each slipping by about 10%. Notably, hospitality stood out as an anomaly, with a 9.2% increase in transaction activity, while commercial general remained relatively stable, posting only a modest 5.5% dip.

Broad YoY Weakness

The YoY picture was equally grim, with every sector seeing reductions in transaction counts. Office struggled the most, down 15.4%, followed by multifamily (-11.4%), retail (-8.7%), and industrial (-5.6%). Even hospitality, which had shown recent resilience, fell by 6.5%.

Breaking The Mold

In a surprising twist, office properties posted a rare bright spot, with dollar volumes climbing 15.5% quarterly and 20.8% annually. However, this was an outlier in a market that otherwise saw steep drops. Multifamily assets fell a staggering 21.3% in value, and hospitality suffered an 18.4% decline.

Glimmers of Growth

The story by square footage was similarly bleak. Hospitality surged 27.6% quarterly and ticked up 0.9% annually, while office eked out a 4.4% annual gain. Conversely, multifamily properties saw a dramatic 18.1% drop in square footage transacted, and industrial wasn’t far behind with a 15.9% contraction.

At The Bottom?

While some experts suggest CRE markets are nearing a bottom and now could be an opportune time to invest, the data indicates continued volatility. Historical comparisons to post-Great Recession years underscore the fragility of current market conditions.