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Green Street Advisors: CRE Prices Up 10%

February 8, 2010

According to the Green Street Advisors Commercial Property Price Index (original name), prices are up 1% in January, and now up 10% off the bottom reached in May of 2009. The GSA’s index is based on prices for transactions which have not yet closed yet, as opposed to Moody’s which reflects closed transactions.

This is also in contrast to the MIT TBI index, which for the 4th quarter showed “a 4.9% decrease in prices compared to the previous quarter for properties sold from the NCREIF database, placing the price index 39.5% below its 2007 Q2 peak, slightly below where it was two quarters ago.”

We prefer the MIT/TBI index (transaction-based index) over the Moody’s and now Green Street CPPI, but what this report tells us is that we’re stabilizing. Whether we’ve reached a bottom or not depends on a lot more than a fancy chart, so a lot remains to be seen over the next few months with the market, sovereign debt, and retail and employment numbers.

GSA report below…

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Categories: Commercial Real Estate Investing | Market Data
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@CREConsole February 8, 2010

We'd agreed, the GSA methodology seems to be a bit more obscure than Moodys/REAL CPPI. While this index was down 4.9% in the fourth quarter, it did observe some compression in spreads between what buyers are offering bidding and sellers are accepting, using MIT's TBI Liquidity Metric. Before we found this measurement index, it was tough for us to actually quantify this condition to many sellers. If anyone is interested learning more about the TBI Metric, see our blog post at http://bit.ly/9Jiq5F.

joshua February 9, 2010

i wonder how they control for failed escrows and renegotiations. im too tired to ready the paper.

@CREConsole February 9, 2010

Haha, good point. I didn't see a control for that in their methodology…..

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