DLA Piper Year-End Real Estate Trends Report Points to a Market Turnaround

DLA Piper’s 2024 Year-End Real Estate Trends Report shows the commercial real estate market turning a corner, with an increase in US commercial real estate transactions excepted throughout the remainder of the year.

The report analyzed more than 950 purchase and sale agreements and more than 500 property management agreements handled by DLA Piper’s US Real Estate Group in 2024. The group saw an increased number of matters in 2024 compared to 2023, with significant transaction volume in acquisitions and dispositions, including joint ventures. The group handled a high volume of transactions in the downtown and greater metro areas of Washington, DC, New York City, and Chicago, as well as in urban and suburban areas in California and Texas.

“As the challenges posed by inflation and rising interest rates subside, the US commercial real estate market is reviving. Along with many of the world’s largest and most sophisticated investors, we’re optimistic about the US commercial real estate market over the upcoming 12 to 24 months and expect to see greater investment activity continue,” said Bryan Connolly, Chair of the firm’s US Real Estate Practice.

Housing assets lead, with office and data center growth

Housing-related assets continued to account for the largest percentage (40%) of the transactions handled by DLA Piper’s Real Estate Group in 2024, with a noticeable increase in investment activity in that sector in the second half of last year. Of these transactions, 68% of transactions were apartment investments, up 5% from 2023. “Given the continued shortage of housing in the US, it’s no surprise that housing transactions accounted for the largest percentage of our transaction activity last year,” Connolly said.

Other active asset classes include office properties, up 3% to 11% in 2024, and data centers, up 5% to 9%. Mixed-use properties also saw a percentage point increase, while retail transactions held relatively steady at roughly 9% of DLA Piper’s transaction volume.

The asset classes for which the group’s transaction volume decreased from 2023 to 2024 include hotel and medical office properties as well as industrial transactions, which started off strong but ended with a drop from 21% to 12% year-over-year.

Positive Macro Outlook

The gradual reduction in interest rates expected this year, coupled with adjustments in asset values and an abundance of available investment capital, is leading to a palpable sense of optimism among commercial real estate sector, with a number of leading investors having made multi-billion dollar investments in the second half of last year and projected increased investment activity this year. The Real Estate Group’s experience in transactions across the country last year reflects this increased investment activity.