- Large property sales in 2024 outperformed smaller deals for the first time since 2021, reversing the trend seen in 2023.
- Sales of properties priced between $5M and $25M dropped 10.7% in 1H24, while sales of properties over $25M fell by only 8.6%.
- Factors include fewer distressed deals in the smaller property segment and a shift in focus by private investors toward higher-value assets.
The first half of 2024 saw a significant shift in the CRE market, with larger property sales outperforming smaller deals—a reversal from the trends of 2023, as reported in Globest.
By The Numbers
According to Green Street’s latest Real Estate Alert, sales of properties priced between $5M and $25M dropped by 10.7%, while sales of properties over $25M fell by a smaller margin of 8.6%.
This marks the first time since 2021 that larger properties have outpaced smaller ones in terms of sales activity.
Why The Reversal?
Several factors contributed to this reversal. One key reason is the decline in distressed deals among smaller properties.
Many private clients, who typically invest in smaller assets, were not burdened by late-cycle debt or leveraged financing, which helped stabilize the market for smaller properties.
Additionally, private investors have increasingly focused on acquiring more expensive properties, while institutions have been waiting out market volatility.
By The Numbers
In 2023, smaller properties benefited from higher activity levels, likely due to rising interest rates and financing constraints that made less expensive properties more attractive to investors.
However, 1H24 saw a cooling in this segment, with sales volume for properties in the $5M–$25M range dropping from $44.32B in 1H23 to $39.58B in 2024.
Meanwhile, the larger property market remained more resilient, driven in part by two significant apartment transactions that bolstered overall sales figures.
Why It Matters
Kevin Aussef, president of investment properties in the Americas for CBRE, explained that smaller property investors have faced less distress, as many private buyers weren’t highly leveraged with mezzanine debt.
This led to reduced sales activity in the smaller property segment, as distressed sales typically drive higher transaction volumes.
With fewer distressed sales in the small-property segment and a focus on higher-value assets, the landscape is shifting toward larger property sales, highlighting the changing dynamics of CRE investment strategies.
