MIT Releases Q1 TBI Numbers; Index Drops 5.8%

MIT has released the first quarter numbers for its Transaction Based Index (TBI). The TBI, in MIT’s own words…:

tracks the prices that institutions such as pension funds pay or receive when transacting commercial properties like shopping malls, apartment complexes and office towers. The MIT Center’s TBI is based on prices of National Council of Real Estate Investment Fiduciaries (NCREIF) properties sold each quarter from the property database that underlies the NCREIF Property Index (NPI), and also makes use of the appraisal information for all of the currently 6,000 NCREIF properties.

This quarter’s results peg the loss in value at 5.8% for the quarter, marking the sixth quarter out of the past seven which has seen a price drop. The index is now some 21% below the year ago period, and 26% below the peak reached in mid-2007. In the late 80’s/early 90’s, the drop experienced was about 27%.

The director of research at the MIT Center of Real Estate hinted that it was possible that this quarter could be the low point, but looking at some of these graphs, particularly those reflecting the wide gap between supply and demand, it is difficult to see how that could be the case. We might see some stabilization, but I suspect the risks investors are facing are still too great to warrant any great rebound. The fundamental issue of economic/rent growth and interest rate risk still have to be solved, and until we see at least some back-to-back quarters of positive development in that realm, I suspect money will continue to sit on the sideline. I could be wrong, but I think their is still some significant bloodletting remaining in commercial real estate.

Embedded below are all the charts released for first quarter data.

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