The first half of 2021 brought a convergence of exceptional market fundamentals, as low interest rates and outperforming equity markets lowered the cost of capital for many buyers, while pent up post-COVID demand, an over-active M&A market, and an influx of new sale leaseback buyers combined to compress cap rates across many sectors. Retail activity showed a notable return to optimism during the period, moving back toward pre-pandemic contribution levels, while industrial properties continued to command attractive pricing and led all sectors in overall activity. With more companies anticipated to enter the M&A market as the year progressed, an attractive value arbitrage between business and real estate multiples remained prevalent across many middle market sub-sectors, pointing to continued strength through the remainder of 2021.
