Over the past two years, Chicago-area landlords have capitalized on a strong economy and low interest rates by selling properties at a rapid pace. But after a whirlwind couple of years of real estate sales transactions, deal volume in the Chicago area is finally slowing down. Sales of commercial properties year to date through August were down 20 percent from the same period in 2016, to $9.8 billion, according to New York-based research firm Real Capital Analytics. While nearly $10 billion is still far more action than there was coming out of the Great Recession, it's the lowest amount spent on office, industrial, retail, apartment and hotel properties in the market through the first eight months of the year since 2014.
According to Crain's Chicago Business, investors spent a record high $23 billion on commercial properties in 2015 and maintained that momentum last year with $21 billion in deals. But with so many owners cashing out—many at big gains—buyers' optimism may be waning about how much further values will rise.
"Buyers and sellers are further apart than they have been," said Real Capital Analytics Senior Vice President Jim Costello. "When you're buying an asset, you have expectations of modest growth, not double-digit growth. The opportunity is not as rich as it was a couple years back."
It's not just a Chicago issue. Other large urban markets like New York and San Francisco have also seen pullbacks in the office market amid high asking prices and without interest rates getting any lower. That contrasts with small and mid-sized markets, where the change in property sales is not as dramatic. Through August, commercial property sales nationwide were down just 6 percent year-over-year.
For the full article from Crain's Chicago Business, click here.