At the end of the second quarter, capital markets were still bogged down over deal volume and pricing with uncertainty stemming from the coronavirus pandemic. Distressed trades had truly yet to emerge.

However, with the first full quarter of the pandemic’s economic shutdown in the past, markets can begin to sense how commercial real estate investors and lenders are responding, according to Robb Calhoun, managing director and senior economist of U.S. market analytics for CoStar.

“It is something of an understatement to say that deal volume dropped off significantly in the second quarter,” Calhoun said in a new video. “At just over $10 billion a month for the last three months, that’s a pretty substantial shortfall from normal second-quarter activity,” which was well over $30 billion per month compared to the same quarter last year.

That lack of volume has inhibited setting the market’s proper prices. There have been no large deals with low capitalization rates, and that lack of low yields is joined by few small- or medium-sized transactions with cap rates less than 4%, according to Calhoun. Moreover, the deals that have closed have shown quite a bit of variance across property types.

When a property is sold more than once, the price change from the pair of first and second sales are used to calculate pricing trends.

Based on repeat sales, multifamily led the way in the second quarter with a 7.7% average return, followed by industrial at 6.8%. But then the returns drop off, Calhoun said, with office repeat trades only returning 1.4% and retail trades averaging only half of that.

A clearer picture of pricing trends could emerge in the third quarter, according to Calhoun.