Core Assets, Leading Metros Drive Rise in September Moody's/REAL Pricing Index
Bloomberg reports: The September Moody’s/REAL Commercial Property Price Index (CPPI) was released on November 22, 2010. According to the report, US commercial property pricing jumped by 4.3 percent between August and September, the largest one-month increase in the decade-long history of the index. The spike reflected a handful of extremely high-priced deals, which outweighed the volume of distressed asset sales that have been a significant drag on the headline index. Previously, the index had fallen to a multi-year low in August. It is up by 0.3 percent year-over-year.
In its article on pricing trends for commercial property, Bloomberg interviewed Moody’s managing director Nick Levidy, who confirmed that “The relatively large swings in the index recently are due in part to the uncertain macroeconomic environment and the effects of a thin market with low transaction volumes.” It was also pointed out that the strongest improvements in pricing have occurred for core properties, where investors can feel secure in achieving solid profit returns. Nonetheless, Bloomberg reiterates that the index has fallen by 43% from its October 2007 peak.
The report disaggregates the headline index by property type and metropolitan areas. As of the September report, pricing for the apartment sector rose the most year-over-year, by 16 percent, while the retail sector fell by 12 percent over the same period. The industrial and office sectors rose 1 percent and 4 percent, respectively. The report confirmed that the nation’s leading metros have experienced the largest rise in pricing over the past year. Of the top ten metros by dollar volume, New York, Los Angeles, Washington, DC, San Francisco, Atlanta, and Chicago have recorded the greatest year-over-year improvements in pricing for all property types.
View the full article on Bloomberg: Core Assets, Leading Metros Drive Rise in September Moody's/REAL Pricing Index
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Posted by: Nina Turner