Number of Transaction Continues Declining Trend

The number of commercial real estate transactions recorded on Cape Cod, MA through April 2008 was 25.4% lower compared with January-April 2007. This recent downshift follows a 39.3% drop in the first four months of 2007 and was the second largest decrease since 2000. Although notable, the lower YTD 2008 decline suggests the softened demand is moderating. Between 1999 and 2008, the median January – April change in the number of individual transactions was -10.6%.

While most sectors reflected comparable year-to-year demand levels, the recent decline was clearly at the expense of softening in the commercial condominium and vacant land sectors. Total YTD 2008 transactions were evenly distributed in each of the four months with a favorable burst in month end closings experienced in April.

Gross Sales Up Boosted by Investor Acquisitions

Despite the slide in property closings, total YTD 2008 commercial property sale prices reached $85.2 million which was nearly $28.0 million higher than the level achieved in the same period in 2007. The January-April 2008 total commercial property sales volume represented about 9.5% of the total stated value (greater than $50,000) reported by the Barnstable County Registry of Deeds for all property sales in the same period. 

Boosting the total dollar volume was the higher number of investment property acquisitions which included two net leased CVS pharmacies, two shopping centers and a reported sale of Bass River Marina in West Dennis, MA. Collectively, these five sales gave the market a $42.8 million injection. A solid and proportionately higher percentage of $1.0 million plus commercial transactions completed by able funded buyers kept the YTD 2008 dollar volume at a favorable level as well.  

The Take Away

Transaction levels may well continue to erode but less precipitously. Investors and well capitalized cash flow buyers will continue to pattern the national trend toward a flight to quality. Limitations on the available supply of assets of this caliber, including attractive sale-leaseback deals will be an issue for buyers. Owners of quality assets, however, will likely be in a good position to respond to this demand trend.