Marcus & Millichap Sales Volume Rises 12.6%

Commercial real estate buyers did not show up more often last quarter. They just brought bigger checks.

Marcus & Millichap, a national brokerage that specializes in commercial property investment sales, said brokerage sales volume climbed 12.6% to about $9.4 billion in the third quarter, according to its earnings release ^[1]. Yet it closed 1,584 brokerage deals, two fewer than a year earlier ^[1].

By the numbers

• Total revenue rose 7.5% to $208.4 million, and the company earned $1.0 million, or 3 cents per share, as the AP also reported ^[1][2].
• The average brokerage deal grew to about $5.94 million from $5.27 million a year before ^[1].
• Deals of $20 million or more rose to 80 from 72, lifting that tier's volume to roughly $3.8 billion ^[1].
• Private client deals between $1 million and $10 million, the company's core, grew revenue just 3.6% to $106.0 million ^[1].

But the growth came with thinner pay per dollar. The average commission rate fell to 1.85% from 1.94%, and financing volume rose only 0.7% ^[1]. Nadji blamed rate volatility, saying private client activity cooled after the 10-year Treasury yield rose 80 basis points in the quarter ^[1]. Profit stayed slim: operating expenses of $209.3 million topped revenue ^[1].

What it means for you

Rising Treasury yields push cap rates and pull prices down, which is why sellers and buyers stall. By our math, a small apartment building earning $60,000 a year in net income is worth $1 million at a 6% cap rate, but about $882,000 if buyers demand 6.8%. The 10-year Treasury stood at 4.86% on November 6, according to The Portal's data ^[3]. Watch that spread before pricing any sale.

Zoom out

Nadji expects more properties to change hands into 2027, pointing to "a growing number of assets that need to trade as loans mature" ^[1]. For now, the money is flowing to large deals while the small investor market waits on rates.