After 13 consecutive months of declining property values, the Moody’s/Real Commercial Property Price Index measured a one per cent increase in prices in November.
Prices began falling over two years ago and significant declines were seen throughout 2009, with several months experiencing five per cent-plus value drops.
The one per cent growth in prices seen in November is a small bright spot for the commercial real estate sector, which has seen values fall over 43 per cent from the peak.
Transaction volume has stayed relatively consistent in 2009, with November performance having a slight dip over the month before. Transaction volume is no longer in the freefall seen throughout 2009 and Moody’s/Real says further large declines are unlikely.
There were 362 transactions in the overall market in November, with a total value of USD4.1bn. Of those transactions, 91 were repeat-sales used in calculating the CPPI. The 91 sales had a total value of USD1.3bn.
Moody’s/Real expects commercial real estate prices to decline further in the months ahead. Prices for properties with short term lease structures, such as multifamily, could show signs of a sustainable recovery later this year, while other property types will likely need longer to turn the corner.
