Washington’s Commercial Real Estate Property Sales Market Sees Best Performance in 18 Months with Sharp Increases in Transaction Velocity and Sales Volume

CBA's Commercial Market Analysis (CMA) Sales Report analyzes yearly and 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.

Q2 Highlights & Summary:

• With the improved Q2 performance of CRE property sales and lower interest rates on the horizon, the market is showing signs of reverting to more normalized levels and historical averages; but it's too early to call this a market recovery, or even a trend. (Note: Based on CBA’s historical data since 2012, average quarterly sales volumes typically range from $2.5 to $4.0 billion).

• Q2’s $2.4b in sales volume represents a 75% increase from Q1 and is the highest volume since Q4 of 2022 and the first time during that period that sales volume has surpassed the $2b threshold.

• Q2’s 477 total sales transactions are also the highest since Q4 of 2022. This represents a 28% increase from Q1 2024, which was the lowest number of transactions since the COVID-19 shutdown timeframe.

• Multifamily is the leading asset class, with more than $1.06 B in sales, representing 43.5% of all dollar volume for the quarter, and more than 2.4X more than retail, the second-best performing asset class.

• The quarterly rank of dollar volume (and percent of total sales volume) by asset class is as follows:

1. Multifamily - $1.06 billion (43.5%)
2. Retail - $445.9 million (18.4%)
3. Industrial - $406.5 million (16.7%)
4. Office - $301.2 million (12.4%)
5. Land - $210.1 million (8.6%)

• Office property sales surged in Q2 by nearly 62%, but this is coming from a VERY low basis of sales, which virtually halted after the interest rate-driven downturn in the market. The office sector has unique struggles in this region due to the tech hiring downturn and employee’s reluctance to return to the office/work-from-home dynamic over the past few years.

• Several stabilized, institutional, or high-value multifamily properties (in excess of $25 million) transacted in Q2 at discounts from peak pricing/purchase levels from the second half of the last decade (roughly 15% to 20%). Generally speaking, and absent vacancy issues, these transactions reflect the realities of higher financing costs due to elevated interest rates.

• On the extreme end of the spectrum, downtown Seattle's Pacific Place Mall retail property sold in Q2 at a steep discount from its peak sale price in 2014. Due to high vacancy at both the property and submarket levels, it sold for $66.75 million, a 75% decline from its sale price in 2014. The good news is that this benchmark sale represents an opportunity for the downtown retail rental market to reset itself at a lower basis. Thus, we may start to see an increase in interest in downtown Seattle again from national retailers as projects and locations begin to pencil due to lower rental rates.

Q2 - Sales Velocity and Volume (2024 vs 2023) by Counties and Asset Classes

County

• King: +19% in number of sales, +104% in volume for Q2.
• Snohomish: -13% and +32%.
• Pierce: -2% and -35%.
• Spokane: -3% and -9%.
• Kitsap: No change and +137%.
• Thurston: -45% and -91%.
• Whatcom: -8% and -3%
• Skagit: +64% and -3%

Asset Class

• Office: +26% in number of sales and +62% in volume for Q2.
• Retail: -2% and +46%
• Industrial/Flex: -6% and +1%
• Land: -15% and +16%
• Multifamily: +5% and +40%

DOWNLOADABLE REPORTS

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

For questions about the report, please contact Binh Truong, Director of Market Data and Business Development, at binh@commercialmls.com or 425-952-2727.