As the country reeled from COVID-19 shutdowns, sales volume has fallen across commercial real estate.
But there have been bright spots in some sectors, namely multifamily and industrial can count several major deals that have been completed.
The largest multifamily deal currently on Green Street’s Real Estate Alert’s Largest Deals list for the third quarter was the $320 million trade on a 40-story, 461-unit skyscraper in Seattle called the Kiara, which was built in 2018.
On the other end of the density scale, single-family rentals have also been popular during the pandemic as some people leave apartments for more space.
Front Yard Residential Corp., a provider of single-family rental housing, was recently taken private by alternative investment management firm Pretium and a group of its investors and funds managed by the Real Estate Equity and Alternative Credit strategies of Ares Management Corp. The all-cash transaction values Front Yard at $2.4 billion. It makes Pretium the second-largest owner and operator of SFR properties in the US, with a portfolio of more than 55,000 rentals.
Industrial has been the top performer as its unlevered value has grown by 3% since the beginning of the pandemic. Transactions are being driven by whether Amazon is a tenant, according to Green Street.
In the office sector, Green Street reported approximately a dozen transactions of more than $100 million during 3Q20, including two Manhattan deals, which started before COVID. One trade, 1375 Broadway, had a large, preferred equity component, while 522 5th Avenue had a lengthy closing period that proved helpful to the purchaser.
While demand dropped for New York offices, Seattle had 14 large office deals, totaling $2.2 billion on the market. In the Bellevue tech market, Facebook acquired the property slated to be REI headquarters.
Life sciences have been a growth spot in the office market. Bain Capital Real Estate sold a trophy portfolio in the South San Francisco life science cluster for $1 billion to The Ventas Life Science and Healthcare Real Estate Fund.
And earlier this month, Blackstone Real Estate Partners VIII and co-investors agreed to sell BioMed Realty for $14.6 billion to a group led by existing BioMed investors.
For the hardest-hit sectors, the story in Q3 was different. While no sizable retail deal changed hands in 3Q, nearly all hotel deals fell in the distressed category. For example, Green Street points to Magna Hospitality Group acquiring 60 West 37th Street from Ashford Hospitality Trust for $115 million in September, approximately 40% below the January ‘19 sale.