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Friday, 07 November 2014

Overall Property Prices Climb in September, Top 2007 Levels

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Commercial Real Estate Direct Staff Report

Commercial property prices increased by 50 basis points in September and are now 20 bp above their pre-recession peaks reached in November 2007, according to the Moody's/RCA Commercial Property Price Indices, or CPPI.

Prices had hit their low point in January 2010, when they were 40 percent lower than their peaks, according to the indices, which track repeat sales of properties in deals valued at $2.5 million or more.

"Commercial property prices have now completed a peak-to-peak round trip in just under seven years," according to Moody's Investors Service, which co-publishes the CPPI with Real Capital Analytics, the New York research firm that provides the data used to compute them.

However, if you look only at properties in non-major markets, prices as of September were still 10.4 percent below their peaks, reached October 2007. Prices for properties in major markets, however, were 12.8 percent above their pre-recession high, reached in December 2007.

Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C., are the major markets defined by the CPPI.

During the third quarter, prices in major markets increased by 2.9 percent, and were up 14.6 percent for the 12 months ended Sept. 30. In contrast, non-major market prices were up 1.6 percent during the quarter and 12.8 percent for the year.

Office properties in central business districts, or CBDs, led all property sectors, with a 6.7 percent increase in pricing during the third quarter and 17.8 percent increase for the 12-month period. That compares with gains of 2.2 percent for the quarter and 13.5 percent for the year period for all property types combined.

Retail has been the worst performer recently, with a 1.2 percent drop in pricing during the quarter and a 5.3 percent gain for the 12 months. The second worst, suburban office, posted gains of 90 bp and 13.5 percent, respectively.

Meanwhile, industrial prices were up by 2.1 percent in the quarter and 15.2 percent for the year period, and multifamily prices were up by 2.4 percent and 15.5 percent, respectively.

There are major distinctions in price changes among individual sectors in major versus non-major markets. For example, during the third quarter, CBD office prices increased by 9.9 percent in major markets, but dropped by 3.8 percent in non-major markets.

While pricing for all property types combined finally exceeded the pre-recession peak during September, several subsectors previously had exceeded their past peaks and have since risen further above them. Most significantly, pricing for multifamily nationwide is 17.8 percent above the pre-recession peak reached in November 2007, and in major markets it's up 34.6 percent.

CBD office pricing nationwide is 17.4 percent above its pre-recession peak in December 2007, and in major markets it's up by 27.9 percent, while it's still down by 13.1 percent in non-major markets.

Comments? E-mail John Covaleski or call him at (267) 247-0112, Ext. 208.



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Read 1240 times Last modified on Friday, 07 November 2014

Data Digest







Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44




cppichart FP



CMBS 2.0 Spreads


Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41





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