2018 In the Rear View Mirror - A Quick Recap

While the US commercial property market hit near-record levels of deal activity last year, there was a pronounced slowdown in the fourth quarter, according to Real Capital Analytics, the commercial real estate analysis firm.

Normally, deal activity in any fourth quarter will be greater than the preceding third quarter due to typical seasonal patterns of consumption. And aside from 2005 and the ensuing global financial crisis, fourth quarter deal volume has never dipped below third quarter sales.

Yet 2018 Q4'18 sales volume was charted at nearly $2 billion short of Q3. Curiously, however, the transaction count was up over 10 percent from the previous year--so more deals but a lower aggregate dollar volume.

Overall, the US commercial real estate market is sending mixed signals. Despite the recent volatility of the stock market, prices were unchanged and CAP rates flat in Q4. Investor caution may well be coming from yet another hike in lending rates. The 10-year UST jumped from a fairly stable average of 2.9 percent for most of 2018 to 3.2 percent in October.

Then there are the economic machinations emanating from Washington in the form of tariffs, sanctions, and congressional budget squabbles. Once our government re-opens for business--hopefully soon--we'll be able to gather more indications to project 2019 performance.

Meantime, we'll all carry on bravely knowing that the US continues to lead the world in commerce and economic development.