For sellers of high-quality real estate assets in global cities, liquidity currently is likely to be of little concern, with market activity at present comparable to 2007 levels. Buyers who need to deploy capital, however, may disagree. With record-breaking investment volumes in the United States, and upward of $1 trillion of commercial real estate transacted globally in 2015, foreign investors are becoming progressively more significant.

Considering the volume of direct real estate transacted last year and the amount of capital being allocated internationally, institutional investors must somehow gauge the liquidity characteristics of markets when allocating real estate within their portfolios. The investing world might be growing, alongside improvements in transparency and accessibility, but little research has been published on the variations in liquidity across commercial markets.

A sum of many parts

Liquidity is a key consideration in direc