Reports Show Improvements in Commercial Property Sector

Reports by New York-based firms Moody’s and Real Capital Analytics show positive trends in the commercial property sector that experts are attributing to improved credit conditions.

Commercial real estate prices and transactions are both improving, the reports show.

Moody’s reported a 4.3 percent increase in commercial real estate prices during September, marking the first increase in the All Property Type Index since May. Prices rose 0.3 percent from this time last year, although they are down 36.8 percent from two years ago.

The quarterly report measured changes in prices for apartments, industrial properties, office properties, and retail properties.

Though the report posted favorable results, two sectors, office and industrial, saw declines in prices.

The office index saw a 3.8 percent drop in prices and industrial saw a 4.3 percent drop.

“Each of the summer months this year recorded declines in the 3-4 percent range, followed by this month’s sizeable uptick,” said Moody’s Managing Director Nick Levidy, in a statement.

He continued, “The relatively large swings seen in the index recently are due in part to the uncertain macroeconomic environment and the effects of a thin market with low transaction volumes.”

Dollar volume of the 153 repeat-sale transactions for September came in at $3.7 billion, a sizeable increase from August’s $1.85 billion.

A similarly positive report by Real Capital shows transaction volumes continuing to improve, and predicts a strong fourth quarter. Transaction volume grew 5.9 percent from September to October.

Falling prices for office and industrial properties may have helped bring in respective 127 percent and 38 percent year over year transaction increases.

The report revealed asset sales for October were up 121 percent year-over-year, with $12.6 billion in sales for the month. This marks the highest monthly volume for more than two years.

Apartment sales are currently at 3.4 billion for mid-November. Last year November and December apartment sales combined totaled 3.5 billion.

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