MarketSnapshot: Multi-tenant office

The multi-tenant office sector recorded $22.7 billion in third -quarter sales volume. That marked a 31.8% increase from the prior quarter and a 27.0% gain year over year.

The West remains the leading area for transaction volume, accounting for 24.8% of nationwide sales at $5.6 billion. The Northeast and Southeast were effectively tied for second place, each recording roughly 18% of volume and $4.1 billion in sales. The Southwest recorded $3.5 billion in sales at 15.5%, while the Mid-Atlantic region recorded 11.3% at $2.6 billion. The Midwest trailed, recording $1.7 billion in sales, or 7.6% of total volume.

The average cap rate increased by 9 basis points in the third quarter to 7.58%. Compared to one year ago, the average cap rate is also up 9 basis points.

Domestic private buyers have accounted for just over half of all sales this year, in line with the previous two years. REITs and international buyers continue to make up only a small share of sales, while institutional buyers make up 22% of total transaction volume.