Capital Markets 2022 Mid-Year Update

By Chris Paszyc, CCIM, SIOR – Partner, Broker

Here at The Boulos Company, and in Maine in general for the first half of 2022, investment sale volume has TRIPLED when compared to the first half of 2021!  While we like to think we’re unique here in Maine, these phenomenal results mirror a national trend.  However, we do not expect this trend to continue.  I’ll provide quantitative and qualitative analysis in this article to explain “Why?”

Maine Investment Property Sales By The Numbers:

(As reported by Mainebiz, in combination with Boulos Company transactions)

                                                         2022 (Q1 + Q2)                   2021 (Q1 + Q2)

Number of Transactions:            25                                          10
Dollar Volume:                             $121.4 million                      $42.7 million
Size (SF):                                       $1.1 million SF                     $357,000 SF
Cap Rate (Average):                     7.08%                                     7.94%

National Investment Property Sales:

(As reported by Jones Lang LaSalle Incorporated)

                                                       2022 (Q1 + Q2)                    2021 (Q1 + Q2)

Nationally:                                  $32.8 billion                         $27.1 billion
Office:                                          Up 7%
Retail:                                           Up 10%
Industrial:                                     Up 22%

It’s clear that investment property sales are up for the first half of the year, but why is it happening?

The answer is FOMO (Fear Of Missing Out, for those of us over 40). Specifically, fear of interest rate hikes in the future.  This works both ways – both Buyers and Sellers are racing to the finish lines as we experience what JLL analysts are calling “real-time pricing discovery”.

Commercial real estate professionals are dealing with the impacts of inflation and the Fed’s response. While initially, re-pricing was debt-driven, a broader assessment of risk is now front of mind.

While the first half of the year showed strong performance, JLL stated there was a slowdown in the second quarter, following the record numbers of Q1 2022.

JLL also noted that debt markets are currently liquid yet volatile, which is expected to cause upward pricing pressure for most CRE sectors.

There will continue to be more availability of investment products in Q3 & Q4 of 2022 to satisfy demand.  We expect robust activity, with investors capitalizing on late-cycle market dynamics.  In summary, if you’re an owner of CRE assets that have appreciated significantly, it’s time to consult with us and obtain an updated opinion on the value of your property, and your real estate strategy going forward.  The Boulos Company looks forward to working with you to develop and execute your real estate strategy throughout the rest of 2022 and beyond.

Source: JLL U.S. Net Lease Market Update August 2022

Want more commercial real estate insights?

Sign up for The Boulos Report

We’ll send you a concise email newsletter once per month featuring CRE market updates, and a transaction report telling you who’s buying what and who’s moving where in Maine & New Hampshire.

The Boulos Report Sign-Up Form: