CBA'S RESEARCHED SALES COMMERCIAL PROPERTY SALES ANNUAL & QUARTERLY REPORT Q4/FULL YEAR NUMBERS (2021 vs. 2019-2020) 

Washington’s 2021 Commercial Property Sales Numbers Rebound to Pre-pandemic Levels 

SUMMARY HIGHLIGHTS: 

• After the COVID-induced recession and correction in the market during 2020, sales transactions in ‘21 were up 5.5% compared to 2019, but 1.4% shy of 2019’s record-breaking sales (dollar) volume.
• Q4 2021 highest in sales velocity for the year, but volume slowed a little bit compared to Q3 2021.
• Multifamily was the brightest star of Q4 2021, making up roughly 48% of sales volume at $3.48b.
• Overall, huge rebound in 2021 versus 2020: Full-year sales volume up 110%, velocity up 68%.
• CBA's Commercial Market Analysis (CMA) Sales Report analyzes quarterly economic and commercial real estate sales activity and trends at the market and submarket levels. We are pleased to offer this detailed analysis and report for your use and interpretation.

FULL REPORT  

CBA's Commercial Market Analysis (CMA) Sales Report analyzes quarterly economic and commercial real estate sales activity and trends at the market and submarket levels. We are pleased to offer this detailed analysis and report for your use and interpretation.

In this report, we compare same-month, total quarterly and year-to-date sales numbers by asset class and county from 2019, 2020 and 2021.

The 4^th quarter saw the highest sales velocity of 2021 with 744 transactions, a 33% increase compared to the same period last year. Sales volume for the quarter was $7.3b, a step down from the red-hot 3^rd quarter that saw $8.3b in volume, but still a 38% increase compared to the 4^th quarter of last year. Overall, it was a strong quarter, on par with activity seen in record-breaking 2019.

For 2021, all asset classes are up compared to 2020. Office leads the way in sales velocity increases with transactions up 89%, followed by Retail (88%), Multifamily (68%), Industrial/Flex (63%) and Land (35%). For sales volume, Retail increased the most at 195%, followed by Multifamily (157%), Industrial/Flex (141%), and Land (86%), with office showing the lowest increase at 50%.

All counties showed positive numbers compared to 2020. Thurston County saw the highest increase in sales velocity at 130%, followed by Spokane County (104%), Snohomish County (90%), Kitsap County (86%), and Pierce County (81%), with King County coming in last at 44%. By sales volume, Snohomish County lead with an increase of 242%, followed by Spokane County (205%), Pierce County (166%), Thurston County (126%), King County (86%) and Kitsap County (83%). 

2021 was a complete rebound to pre-pandemic activity. Overall numbers were comparable to 2019, which was a record-breaking year. In 2019, there were 2399 sales with a sales volume of $22,294,990,31 at 200,571,868 square feet. 2021 saw 2530 sales -- a 5.46% increase from 2019, $21,972,133,444 in sales volume -- a decrease of only 1.45%, and 232,313,293 square feet -- an increase of 15.8%. Almost every asset class increased in sales volume compared to 2019, with office being the lone exception. With so many unpredictable variables still in play, it will be interesting to see if that momentum can carry through 2022.

Multifamily: With $7.68B in property sales during 2021, Multifamily represented the highest dollar volume of sales for the year, up 156% from 2020. This rebound was fueled by investors recognizing the massive population gains in Washington due to the strong economy, renters returning to urban markets as they prepare to return to the office in areas like downtown Seattle, the end of the COVID eviction moratorium in the state, and the significant affordable housing shortage that continues to plague the state, which in turn is creating future rent growth opportunities for owners. 

Office: With its large and highly valuable trophy assets, Office traditionally represents the highest level of dollar volumes in our state. Coming in at $5.41B in sales 2021, Office was still second, but it was a far cry from the record-setting levels of 2019, which came in at $9.11B. That being said, transaction counts were almost equivalent to 2019, at 579 vs. 584. It must be noted that 2019’s record level was fueled by the impending implementation of Washington’s increased Real Estate Excise Tax (REET) on highly valued properties. In 2019, the market saw more sales volume for trophy-asset transactions compared to 2021. In 2019, there were 17 Office deals over $100m, for a grand total of around $5.6b, with an average of $330.6m per sale. 2021 saw 16 of these deals, but only totaling $3.43b with an average of $214.1m per sale. Looking a little bit deeper with Office deals ranging from $20m-$99.9m, 2019 had 36 deals totaling $1.48b and 2021 saw 17 deals totaling $763m. Also, due to COVID and the shift to more work-from-home and hybrid working models by tenants, the Office sector continues to see some apprehension and trepidation by investors about the long-term future of the asset class. As COVID eventually wanes, we expect investors’ appetite to increase due to the strength of Washington’s economy and long-term growth projections. 

Industrial: With $3.82B in investment volumes in 2021, Industrial was up 59.2% from 16% more transactions 2019. Industrial has been a boon for sellers as their property values have seen marked increases due to sizable rent growth and a significant dearth of supply over the past 3+ years. Driven by the state’s million new residents over the past decade, the growth and appetite for new distribution centers up and down the I-5 Corridor in Puget Sound remains robust. The ports of Seattle and Tacoma are major entry points for imports from Asia, and along with Amazon’s exponential growth, the industrial sector continues to be a winner. 

Land: Developable land sales took off in 2021 compared to BOTH 2019 and 2020. Somewhat surprisingly, COVID did not create as significant of a correction in sales during 2020, down only 14%, where most other sectors saw corrections from 35% to 60%. So, with land values and volumes holding, a significant surge in sales occurred in 2021. With most asset classes throughout the state experiencing shortages in supply of spaces for lease and sale, Land sales increased 59.4% in 2021, coming in at $2.79B.

Retail: >At the outset of COVID, Retail was a clear and obvious casualty due to the state- imposed shutdowns of restaurants, hospitality, and entertainment venues. But, due to savvy local entrepreneurs in retail and restaurants, and the federal relief dollars provided to small businesses, the expected massive waves of vacancies did not materialize. Tenants adjusted business models to work in the pandemic environment. That’s not to say there were no retailers that went out of business, but the carnage was less than originally expected. And, when high-quality space vacancy occurred, there were often tenants lining up to lease the space. Thus, the retail investment and sales market rebounded strongly in 2021. Coming in at $2.27B, this was a 195% increase from 2020, and a 21.4% increase from 2019.  

DOWNLOADABLE REPORTS

CBA'S FULL REPORT OF RESEARCHED SALES FROM 2010 - PRESENT

CBA researches office, retail, industrial, and land sales, $250,000 or more, in King, Snohomish, Pierce, Spokane, Kitsap, and Thurston counties. Multi-family sales of $250,000+, and 5-units or more are researched in King, Pierce, and Snohomish counties. All the raw data provided in our reports are pulled directly from the CBAcma database. 

For questions about the reports or to learn how CBA members can request and use this data, please contact Binh Truong, Director of Market and Sales Data, via email or 425-952-2727.