European commercial property deals beat those for Covid-ravaged US

New York

THE value of commercial real estate deals in the United States, long the most active market for transactions, fell behind Europe in the second quarter as the Covid-19 pandemic hit America harder, according to Real Capital Analytics.

Deals for US commercial properties trailed European transactions by US$19 billion in Q2, based on an analysis of transactions valued at US$10 million or more.

Preliminary figures for July indicate a continuing double-digit decline in US volume from a year earlier.

"With a harsher public health situation in the US, investors face greater uncertainty around underwriting future income trends for a property," Jim Costello, a Real Capital senior vice president, wrote.

"The social safety nets of European countries can look more expensive, but in a time of crisis, they can also help investors understand how economic losses will be distributed."

The US leads the world in the number of coronavirus cases and deaths with infections continuing to add up faster than Europe, which has a larger population.

While countries such as Italy and Spain suffered earlier outbreaks that were brought under control, Europe has faced a surge of new cases in the last few days.

US commercial real estate deals routinely outpaced Europe since the Great Financial Crisis, according to Real Capital, with the exception of the fourth-quarter of 2017, when Blackstone Group sold warehouse firm Logicor to China Investment Corp for US$13.8 billion.

A decline in the value of the US dollar relative to the euro contributed to the European edge in Q2. BLOOMBERG