US Commercial Real Estate “Showing Signs of Capitulation”
Not much to cheer about in the latest Moody’s/REAL Commercial Property Price Indices:
- The National — All Property Type Aggregate Index measured an 8.6% decline in April 2009. The index now stands 29.5% below the peak measured in October 2007.
- Transaction volume continues to fall in both repeat-sales and the overall market.
April’s large price decline on the heels of a 5.5% monthly decline in January hints at an ongoing process of capitulation.
- The repeat sale transactions in the month of April for the first time showed more negative than positive annualized rates of return.
- Apartments are faring better than any other property type in the Eastern region, although all four types measured significant annual declines.
- The South was the worst performing region overall. All four property types saw annual value declines of more than 20%, with industrial measuring a decline of 28.8%.
- All four property types in Southern California underperformed the western market as a whole. Office was the worst performer with an annual value drop of 22.2%.
- The three major office markets measured significant annual declines. In the East, both New York and Washington DC outperformed the eastern office market, with annual declines of 12.9% and 21.1% respectively.
- The Florida apartment market, like the apartment market in the South on the whole, has experienced three straight years of falling prices. Florida apartment values are now down 31% from the peak.
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