Moody’s: CRE Prices Flatten in August
- Oct 27, 2008
Prices for commercial real estate essentially flattened in August, according to a report released from the Moody’s/REAL CPPI.The measure for August was 169.74, a slight decline of 0.1 percent from the previous month, an essentially “flat result.” The index has declined for six consecutive months, and has shown an 11.2 percent fall over the last 12 months. The index is now 11.5 percent below its peak of October of 2007. Transaction level was at the lowest point since the fourth quarter of 2004. The Western office market was the only segment to show a positive quarterly return, from June to August, with a 1.3 percent increase over the previous quarter. Quarterly decliners were led by West-Apartments, which fell 10.9 percent. Neal Elkin (pictured), president of REAL, said that the flattening of prices in August may seem surprising, but that is because they are being looked at through the prism of the tremendous market turmoil of September and October. Transaction levels are still being hindered by a large bid-ask spread between buyers and sellers, he said, but many owners of commercial properties who purchased their properties with high leverage may have to sell, or refinance, although he said “that will be a slow process.” Although Elkin said REAL is not in the prediction business, he said he would be surprised if prices did not show some decline in September.