Commercial real estate investment volume totaled $114.3 billion in Q1 2018, an increase of 4.8% from Q1 2017. Increases in warehouse industrial, mid-/high-rise multifamily and full-service hotel investment helped drive the Q1 2018 volume higher than Q1 2017, despite decreases in office and retail acquisitions. Total investment for the past four quarters was $492.4 billion, a slight decrease of 1.7% from the year ending Q1 2017.

• Office activity was down 12.3% from Q1 2017, driven by a drop in CBD office volume of $2.7 billion or 20.1%. A $5.2 billion or 40.1% decline in retail center investment caused overall retail investment activity to decrease by 30.8% year-over-year in Q1.

• New York, Los Angeles and Washington, D.C. attracted the most investment in Q1, accounting for 28.3% of all acquisitions. The top-15 markets accounted for more than half (61.6%) of total Q1 investment activity.

• Cap rate movement was moderate in Q1, except for industrial cap rates, which fell by 28 basis points (bps). Office, retail and multifamily cap rates were largely unchanged from Q1 2017. Hotels saw the largest cap-rate increase, with rates for limited-service properties rising by 24 bps.

• Pricing for all property types (except for retail) is at all-time highs, with mild deceleration in recent months. Increases in multifamily and industrial pricing continue to lead the national index.

Overall, commercial mortgage origination remains active, though 2018 is off to a slower start than last year. While CMBS activity increased by 38.6% year-over-year, GSE lending decreased by 19.3%, mortgage REITs dropped by 24.1% and life insurance companies decreased by 22.2%. As of March, CBRE’s Lender Momentum Index was up 3.9% year-over-year.

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