U.S. Commercial Real Estate Prices Rise 3.6% in May

Prices of U.S. commercial real estate properties as measured by the Moody’s/REAL Commercial Property Price Indices (CPPI) increased 3.6 percent in May. It was the second monthly gain in a row, after a 1.7 percent rise in April.

“We expect commercial real estate prices to remain choppy in the coming months,” said Nick Levidy, Moody’s managing director. “The positive news of increasing prices over the past two months is tempered by low transaction

volumes, forecasts for slowing macroeconomic growth and the rising risk of a double dip recession.”

In May there were 107 repeat sales, down slightly from the 114 repeat sales in April, according to Moody’s market data. However, by dollar volume, the amount of repeat sales almost doubled, going up to over $1.5 billion in May from less than $800 million in April.

According to Moody’s market gauge, commercial property prices nationwide are currently 38.9 percent below the peak reached in October 2007, and have bounced back 8.6 percent from their October 2009 low.

The May numbers are down 6.3 percent compared to the past year and have dropped 33 percent over the past two years.

Moody’s/REAL Commercial Property Indices are based on the repeat sales of the same properties across the U.S. at different points in time. Moody’s says applying price changes measured in this way provides maximum transparency and methodological rigor, and circumvents the distortions that can occur with other commercial property value measurements such as appraisals or average prices.

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