RCA Insights

US Annual Price Growth Slows to 6.4% in October

By on November 21st, 2018

Annual growth in U.S. commercial property prices decelerated in October to the slowest pace in 2018 so far, the latest RCA CPPI report shows. The US National All-Property Index rose 6.4% from a year ago and 0.4% from a month prior. The pace of annual price growth has been gradually slowing since a high point of 8.4% in February.

1811 US CPPI_6MMvsNMM_150

Waning growth in Major Metros is placing the largest drag on national prices. Prices in these locales were increasing at an 8.8% annual pace at the start of the year, but that clip slackened to 3.1% in October. In the Non-Major Metros prices climbed 7.8% year-over-year in October.

Apartment price growth still outpaces all other types at 9.6% year-over-year, though this pace has been easing since earlier in the year. By contrast, price increases for suburban offices have been picking up since the start of 2018 and in October increased 9.2% year-over-year.

CBD office prices registered the smallest annual price increase among all the property types in October, up only 0.2%. Prices for these properties have been tepid for some time as investors move to suburban locations for yield.

Total deal activity across the property types in October was flat compared with a year earlier, as shown in the latest edition of US Capital Trends, which was also released this week. Headline volume figures would have dropped but for one significant entity-level deal in the industrial sector. For the year to date, U.S. deal volume is up 10% on the same period in 2017, helped by a string of large entity-level transactions. Investor concerns about interest rate increases hobbled activity for most property types in October.

To learn more about the RCA CPPI (Commercial Property Price Indices) and to sign up for reports visit rcanalytics.com.  If you are an RCA client you can access RCA CPPI and US Capital Trends reports and conduct your own pricing analysis on the RCA website.