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U.S. office investment remains selective in Q1 2018, with off-market deals boosting activity
Research - MAY 17, 2018

U.S. office investment remains selective in Q1 2018, with off-market deals boosting activity

by Jody Barhanovich

Despite the length of this expansionary cycle, the U.S. economic outlook continues to be favorable, according to JLL research.

Office transaction volumes exceeded expectations in first quarter 2018, softening by 5.6 percent, a lesser decline than the 12 percent decrease posted in full-year 2017. Amid the slowdown in purchases from off-shore investors, domestic investors accounted for a larger share of transactions. Canadian buyers maintained their position as the most active non-domestic investor, posting nearly $1.5 billion in acquisitions.

JLL’s latest U.S. Office Investment Quick Look covers other trends impacting the U.S. office sector, including:

  • Core liquidity remains soft, but is expected to improve modestly for gateway markets and best-in-market product.
  • One-off transactions lift office volumes to higher than expected levels.
  • Share of transactions in primary markets posted a moderate uptick, representing the highest proportion since 2015. Active secondary markets — such as Atlanta, Houston, Phoenix and Raleigh — were indicative of sustained demand for product in the Sunbelt.
  • Investors’ ability to achieve desired yield is being tested by a prolonged period of cap rate compression.
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