Commercial, Multifamily Prices Grow in November
Commercial and multifamily property prices both continue their rising trends, two report said yesterday.
Moody’s and Real Capital Analytics, New York, said property prices increased by 1.2 percent during the month. Core commercial prices increased by 1.4 percent while apartment prices increased by 0.8 percent.
But looking across sectors, property prices tended to drift “sideways,” noted Green Street Advisors, Newport Beach, Calif. “Pricing for some assets has been a little better, and others a little worse, but for the most part, values have dug in over the past several months,” said Green Street Advisors Senior Analyst Peter Rothemund. “That’s not so unexpected. I think most people knew that the years of double-digit gains weren’t going to last forever.”
Rothemund noted that property price appreciation cooled in 2016. “Prices have been stable over the past three months and are up a modest 3 percent this year,” he said.
Looking at the past three months, Moody’s reported retail represented the only property sector to register a price decline, with prices slipping by 0.4 percent. All other sectors rose by at least 2.5 percent over the past three months. Suburban office and retail are now the only two core commercial sectors with prices below their pre-crisis peak levels, down by 6.5 percent and 0.4 percent, respectively.
“Price growth in non-major markets outpaced that of major markets,” Moody’s said. But it noted that for periods exceeding three years major markets outperformed smaller markets–and that performance gap grows with longer time frames.
Over the past 12 months apartment prices outpaced commercial prices by nearly 5 percentage points, Moody’s said. Apartment prices grew 13 percent over the last 12 months while core commercial prices were up by nearly 7 percent over the same time frame.
Central business district offices have been the best-performing commercial segment over the past 10 years, up more than 82 percent, while suburban offices have been the weakest segment with just 2.8 percent growth, Moody’s said.
