After the coronavirus pandemic essentially froze commercial real estate deal-making for most of 2020, the merger and acquisition market didn't just recover this year — it exploded.

Transactions between real estate investment trusts have totaled $108B through the first three quarters of this year, an all-time record, according to JLL data reported by Bloomberg. Before 2020's pandemic-stricken total of $17B, REIT M&A activity had already decreased in 2019 from $83B in 2018, well below the previous record of $103B set in 2006.

Several factors combined to drive the level of activity to unprecedented heights. Some deals that may have been in the planning stages last year were likely delayed until confidence in the broader economic landscape returned, while specific effects of the pandemic may have widened the gap between haves and have-nots in certain asset classes.

But the availability of capital is likely the chief driver of M&A activity.

A common response to the pandemic among companies, real estate and otherwise, was to hoard cash in order to protect themselves against longer or deeper economic disruptions. To prompt companies to spend, the Federal Reserve pushed down interest rates to historically low levels. As the economy has recovered, the Fed has been reluctant to increase rates again, resulting in an environment wherein many companies have lots of capital in reserve and easy access to even more via cheap debt.

At the REIT level, buying other companies seems to be a much more efficient way of leveraging all that capital to increase the scale of one's business than trying to execute multiple deals at the property or portfolio level. REITs have also been outperforming the stock market on the whole for months now, creating value propositions for those that wish to be acquired, Bloomberg reports.

The current fiscal environment is now approaching its end, with the Fed signaling the rate of inflation in the economy is almost at the point where interest rates will rise again, Reuters reports. Should a shift in monetary policy dampen the M&A fervor among REITs, the activity level seen in 2021 might be tough to match.