MIT US Commercial Property Transaction Index up 4.4% in Q3
First positive price change in over a year and the largest increase since the market downturn began in mid-2007.
The MIT Center for Real Estate’s latest transaction-based index (TBI) paints a pretty picture: Results for the 3rd quarter of 2009 show a 4.4% increase in prices compared to the previous quarter for properties sold from the NCREIF database, placing the price index 36.5% below its 2007Q2 peak. The demand-side index rose by 11.8% (second highest in index history), to 41.9% below its 2007Q2 peak. The supply-side of the market recorded a continued modest drop of of -2.5%, taking that index to 31.8% below its 1Q08 peak. Transaction observations underlying the TBI increased for the second quarter in a row, from 0.6% to 1.0% of the NCREIF population of properties.
The makes MIT/CRE professor Devid Geltner look prescient. In July he told Fox Business News that the market is “very near a point where a dam is about to break” in terms of a turnaround for commercial real estate. “The major factor is prices,” he said. “They’ve fallen to such a level that they’re beginning to look very attractive.” Has the market reached bottom? “The worst is definitely behind us in terms of price drop,” he said. “What’s not behind us is in terms of volume, which is still very low. But volume is triggered by prices, so volume will start turning up.”
More analysis from Reuters.
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