The COVID-19 pandemic has hit many sectors of commercial real estate hard. But the sector is bouncing back. Investors purchased a record amount of commercial real estate in the third quarter, The Wall Street Journal reports.
But office buildings and shopping malls aren’t behind the boom, as they typically are. Instead, some of the biggest drivers in the commercial sector have been apartment buildings, life-science labs, and industrial properties that service e-commerce distribution centers.
Commercial sales have soared to more than $193 billion in the third quarter, up by 19% compared to 2019 numbers. That also marks the largest quarter for commercial property sales on record, Real Capital Analytics reports.
“Coming out of COVID, we’re actually seeing an acceleration of fundamentals across a handful of sectors and that’s really driving investor attention,” Nadeem Meghji, the head of real estate Americas for Blackstone Inc., told The Wall Street Journal. Blackstone has been the largest buyer of U.S. commercial property this year.
Declines during the initial days of the pandemic, particularly of sales of office buildings and shopping centers, have been offset by the first nine months of this year by the large number of sales in other commercial sectors like life science labs, industrial properties, and apartment buildings, according to Real Capital Analytics. Foreign investors are making more purchases, too.
Many of the commercial sales over the past year were single properties and not by large investors snapping up multiple properties, as has typically been the case in years past, Real Capital Analytics says.
An index for Green Street, a real estate data and analytics firm, tracks real estate investment trusts. Its index has jumped nearly 22% from its pandemic low reached during the summer of 2020. The index is also 8% higher than it was prior to the pandemic.