Feb 22, 2010 - CRE News
In a sign that the period of large monthly price declines may finally be over, commercial property pricing in December increased for the second consecutive month, according to the Moody's/Real Commercial Property Price Indices, or CPPI.
The 4.1% hike to 113.58 follows a 1% gain in November that was the first
monthly increase since December 2008 in the indices' all-property
component. CPPI is a collaboration of Moody's Investors Service and Real
Estate Analytics and tracks repeat sales of properties. December's
increase also is the largest monthly gain ever recorded by the index.
Still, pricing ended last year 40.8% below its peak in October 2007, and was down 29.2% from the end of 2008. The largest monthly drops last year occurred in the first half, while prices declined at a steadily slowing pace in the second half before reversing course and heading upward in November.
"Although we are unable to conclude the bottom is here, we do feel that the period of large price declines is over," Moody's said.
It noted that higher sales volumes often indicate pricing bottoms may be near. December's 716 total sales for a combined $9 billion was up 75% by count and more than double in dollar value from November's sales activity.
December's dollar volume also was up 5% from December 2008, and marked the first year-over-year gain in volume since credit markets became dislocated in late 2007.
The December 2009 transactions included 162 repeat sales with a combined value of $2.2 billion.
Pricing in the fourth quarter of 2009 increased from the preceding quarter for every property sector except retail, which dropped 1.5% to an index of 139.61.
The office sector led the fourth-quarter pricing upticks with a 7.9% gain to 122.15. It was followed by multifamily's 7% gain to 125.89 and industrial's 5.6% rise to 127.3.
For the full year, however, pricing for each sector was down by levels that range from 19% for retail to a high of 23.2% for industrial.
Within the 10 largest metropolitan markets, office pricing in the fourth quarter increased a whopping 26.8% to 134.65, but was still down 14.6% for the entire year. New York registered the largest full-year decline in office pricing at 38.1% to 141.17.