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Moody’s Commercial Property Price Index Posts Large Declines

March 19, 2009

The Moody’s/Real Commercial Property Price Index for January was released, and the numbers don’t point anywhre but down. The National-All Property class logged a 1-month decline of 5.5%, the most since the index was incepted in 2000.

The index is now 21% off its October 2007 peak, with declines showing in every sector (office, industrial, multi-family, retail). While numbers across the board seem to be on the decline, the breakout of the West reveals that 2-3% quarterly increase in the office, industrial, and retail sectors. Multi-family in the west is still off by 9% however. It would seem unwise however to presume we are on the verge of an uptick based on one quarters data. Afterall, the index uses repeat sales as its metric, and according to this very report, transaction volume is at the lowest since 2003.

But to focus in geographically, San Francisco’s Office prices are off by over 10% year-over-year, and just slightly off from 2-years ago. I would however argue that these numbers are far too conservative. Prices are off roughly by 20% year-over-year, and going back 2-years, are probably off by as much as 35-40% in some cases, since two years ago the market was awash with blind (or stupid) money in the market ready to buy anything that moved.

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Categories: Commercial Real Estate Investing | Market Data
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