US commercial real estate is showing signs of a comeback, driven by strong apartment sales, higher office prices in leading metro markets and a few mega deals. Reports by Moody’s, Green Street Advisors and CoStar Group all reflect improved prices for commercial property, including a September increase that set a record for the decade. See the following article from Property Wire for more on this.
Commercial real estate prices in the US increased 4.3% in September from the previous month, the biggest gain in a decade of records.
The Moody’s/REAL Commercial Property Price index is now 0.3% up from a year ago as a small number of high-priced deals drove up values after falling to an eight year low in August.
But the Moody’s/REAL index is still 43% below its October 2007 peak. The gauge measures overall commercial property values on a monthly basis and breaks the numbers down by property type once each quarter.
The changes are based on repeat sales transactions. While the number of repeat sales saw only a slight uptick in September, the dollar volume of those transactions doubled from August to $3.7 billion, according to Moody’s. That was the largest volume since January 2008, the company said.
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The biggest single property sale to close in September was a $208 million deal for Union Bank Plaza, a 627,000 square foot office building on South Figueroa Street in Los Angeles, according to Real Capital Analytics.
Apartment buildings have led prices higher, up almost 16% in the third quarter from a year earlier, Moody’s also reported. An index of retail properties fell about 12% in the same period while industrial buildings fell 1.2%. Office property values increased 4.4%.
Office prices in the top 10 metropolitan areas increased 22% in the third quarter from a year earlier, the most of any property type in major cities. Prices gained 9.4% from the previous three months.
‘Each of the summer months this year recorded declines in the 3 to 4% range, followed by this month’s sizeable uptick. The relatively large swings seen in the index recently are due in part to the uncertain macroeconomic environment and the effects of a thin market with low transaction volumes,’ said Nick Levidy, a managing director with Moody’s in New York.
Two other indexes also show national commercial property prices rising. Green Street Advisors, a real estate research company in Newport Beach, California, said that prices increased 24% in the 12 months through to October, but prices are 21% below its 2007 peak.
CoStar Group, a real estate data service based in Bethesda, Maryland, found that prices for investment grade properties rose 5.5% in September and that values are down 4.9% from a year earlier and 29% from two years ago.
CoStar, unlike Moody’s, tracks transactions below $2.5 million. Green Street’s index includes deals that are in negotiation or under contract, while Moody’s tracks only closed sales.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.