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Summary Analysis & Interpretation
On the surface and at an aggregate level, commercial property sales for 2022 were quite strong relative to the last decade. With $17.6B in sales volume for the year, 2022 ranks as the third highest on record. However, during the second half of the year, the overall property sales market slowed significantly, particularly for large, institutional-grade properties over $100 million in value. For the year compared to 2021, the number of transactions was down 18% and dollar volume was down 20%.
The primary driver for the slowdown in the commercial property sales market was the rapid and sharp increase in interest rates by the Federal Reserve in 2022. As lending rates more than doubled through the course of the year, commercial property sales declined significantly during the second half of 2022 compared to 2021. Dollar volume declined 52% and transaction counts declined 28%.
With only $3.2B in sales volume, Q4 2022 was the lowest 4th quarter sales volume in more than 4 years, including 2020 during the height of the COVID crisis. Comparing this activity to the prior year, transactions were down 35% and dollar volume was down 56%. This was also the second consecutive quarter with negative transaction velocity and volume compared to 2021 quarterly levels, whereas the first two quarters of 2022 showed comparative gains in transactions and sales volume.
On the positive side for annual comparisons, dollar volume was up for Spokane (14%), Kitsap (10%), and Thurston (30%) counties. Aggregated for all six counties, Retail was the only asset class to show annual gains in the number of sales (8%) and dollar volume (9%) compared to 2021.
Looking at county activity during the 4th quarter only, all markets were down in velocity and volume. The largest drop was seen in King County, where transactions were down 32% and dollar volume down 51%, a difference of $2.3B. Snohomish was down 22% and 58%, Pierce was down 52% and 78%, Spokane was down 22% and 21%, Kitsap was down 41% and 76%, and Thurston was down 26% and 25%.
Activity by asset class in the 4th quarter was also negative across the board. Office sales were down 32%, and volume was down 78%. Retail was down 22% and 41%, Industrial/Flex was down 34% and 17%, Land was down 32% and 34%, and Multifamily was down 58% and 65%.
And finally, notable property sales of more than $100 million were down significantly compared to the prior year. During Q4 2022, there were only 5 notable sales compared to 15 sales during Q4 2021, a 67% decline. For the entirety of 2022, there were only 25 sales exceeding $100 million, compared to 45 in 2021, a 44% decline.
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