The fourth quarter of 2021 saw $296 billion in total commercial real estate investment volume, bringing the total for the year to $746 billion, both record highs, according to CBRE. Multifamily led all sectors for investment volume, reaching $136 billion in the fourth quarter and $315 billion for the year.
According to the recent report from CBRE, Los Angeles with $58 billion and New York with $49 billion were the leading markets for commercial real estate investment volume last year. However, Sun Belt markets experienced the strongest year-over-year growth rates. Of the top 20 markets, Houston grew fastest with its volume up by 191% to $26 billion in 2021.
For multifamily investment, Las Vegas saw 394.3% year-over-year growth, followed by Houston with a 379% increase and South Florida with a 240.3% increase.
In the fourth quarter, private buyers had the largest share of investment volume with $143 billion, and REITs and public companies experienced the largest year-over-year growth rate of 153%.
In addition, foreign buyers increased their investment volume 115% year over year in the fourth quarter to $29 billion. Industrial assets accounted for the largest share of foreign investment with 40% in the fourth quarter, closely followed by multifamily assets with 39%, according to CBRE. Foreign capital comprised $56 billion, or 7.5%, of total investment volume last year. Canada, with $21 billion, was the largest source of foreign investment for commercial real estate last year, followed by Singapore at $15 billion and South Korea at $4 billion.
The Real Capital Analytics Commercial Property Price Index grew by nearly 23% year over year in 2021, with multifamily seeing a 23.6% price increase. All sectors, except for retail, saw year-over-year decreases in their average cap rates last year. Garden-style communities had a decrease of 37 basis points in their average cap rates, and mid-rise and high-rise saw an 11-basis point decrease.
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