Commercial Real Estate Investment Hits Record High in 2021

Commercial real estate investment hit record highs in 2021.

According to CBRE, investments in the fourth quarter of 2021 totaled $296 billion, a record high, and an increase of 90% year over year. Investment totals in 2021 overall reached $746 billion, also a record high, up 86% from 2020. Some facets of the commercial real estate industry, like retail, hotel and office took a hit during the pandemic and are coming back with a vengeance. The multifamily sector attracted the most investors in the fourth quarter, with investments totaling $136 billion, an increase of 116% from the fourth quarter of 2020. Industrial followed multifamily in investment spending, reaching $64 billion in the fourth quarter, an increase of 55% year over year. Rounding out the top three was office space, which saw a resurgence following its sharp decline in 2020 due to the pandemic. Spending on office space reached $50 billion in the fourth quarter, an increase of 73% year over year. Portfolio investments also saw a bump, up 89% year over year and reaching $81 billion in the last quarter, a new record.

The majority of investors were private, representing $143 billion in sales, while REITs and public companies saw the biggest increase in year over year growth at 153%, and foreign investors increased their spending by 115% year over year. Canada was the biggest foreign investor, spending nearly $21 billion, followed by Singapore at $15 billion and South Korea at $4 billion. Not surprisingly, as demand grew, so did prices. The RCA property price index rose 23% year over year in 2021, with industrial and logistics increasing the most at 29.2%, followed by multifamily at 23.6% and retail at 21.5%.

Philadelphia was in the top 20 for investment spending in the U.S., with investors spending increasing 57% year over year.