Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Friday, 07 November 2014

Overall Property Prices Climb in September, Top 2007 Levels

Written by 
Rate this item
(0 votes)

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.

 



weekly-call-to-action

“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

  • Industry moves and changes in “The Insider“

Additional Info

  • Syndicate to Realpoint: No
  • Subject: Property Acquisitions (ACQ), Research (RES)
  • Company: Morgan Stanley Dean Witter Inc., Reaxon Net Technologies
  • Private: No
Read 1162 times Last modified on Friday, 07 November 2014

Data Digest

 

CMBS DELINQUENCY VOLUME

dqdataFP1

 

CMBS SPECIAL SERVICING VOLUME

sschartfp

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

 

RCA CPPI

 

cppichart FP

 

 

CMBS 2.0 Spreads

AAAspreads

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

 

 

 

REITCafe

  • Challenging Retail Environment Weights on REITs
    Mixed economic news is weighing on retail markets, pushing REIT performance down in 2015. This week, the National Retail Federation announced that back-to-school spending is expected to be down 9.3% in 2015. This news came on the heels of a report from the Commerce Department stating that retail sales declined 0.3%...
     
  • US REITs Feeling Effects from Turmoil in Greece and China
    International economic forces have taken center stage this week, affecting both US stock markets and REITs. The crash in the Chinese stock market and ongoing concerns about the future of Greece in the eurozone drove markets down during the first half of the week. REITs fared better than the overall market...

  • What Does Increased Construction Mean for Apartment REITs?
    REITs so far this year have raised $17.1 billion of capital through the sale of unsecured notes, bringing the total raised over the past two and a half years to just more than $75 billion. That’s more than they raised during the previous five years. The massive volume shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark...
shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds
warehouse-backstage