This article is from the Australian Property Journal archive
US commercial real estate prices has increased in August for the fourth month in a row, thanks to a reduction in distress property sales.
According to the Moody’s/REAL National – All Property Type Aggregate Index, prices increase 2.4% bringing the index to 15.3% above the post-peak low set in April 2011. Although the CPPI has risen in each of the last four months, it remains close to its two-year average.
Commercial real estate research director Tad Philipp attributed the improvement from a reduction in the share of distressed transactions, which were 21.7% of the repeat transactions that the CPPI measures, down 5.9% from July.
Prices for distressed transactions were down by 3.5% from July and were only 6.9% above the post-peak low set in August 2010.
Philipp said a healthy CMBS market is critical for a broad-based and sustainable commercial property price recovery.
“Although distressed sales may be near their high-water mark for this cycle, we don’t foresee any significant increase in commercial real estate prices over the near term.
“CMBS spreads have widened significantly in recent months, affecting the price and availability of a key source of debt for property acquisitions. We think CMBS loan origination, which would help support acquisition pricing, will decline,” he added.
Looking at major assets in major markets, Moody’s CPPI finds prices rising 0.8% in August. While 33% above their January 2010 trough, the price growth for major assets in major markets has largely cooled off over the past year.
Transaction volume remained high in August at 207 repeat-sales observations. The average monthly transaction count for 2011 to date is 185, as compared with 144 during 2010 and 96 during 2009.
Australian Property Journal
