United States commercial property prices rose 4.3 per cent in September from the previous month, the biggest gain in a decade of records, Moody’s Investors Service said.
The Moody’s/Real Commercial Property Price Index climbed 0.3 per cent from a year earlier as a small number of high-priced deals drove up values, Moody’s said in a statement this morning. The measure had fallen to an eight-year low in August.
“Each of the summer months this year recorded declines in the 3 to 4 per cent range, followed by this month’s sizeable uptick,” Mr Nick Levidy, a Moody’s managing director, said. “The relatively large swings seen in the index recently are due in part to the uncertain macroeconomic environment and the effects of a thin market with low transaction volumes.”
Demand is rising for the best office buildings in major markets such as New York and Washington as investors seek returns higher than fixed income. Interest in well-leased commercial properties in smaller markets may also be starting to increase, according to Mr Robert Bach, chief economist of a commercial broker.
“The demand is still focussed at the core end of the spectrum,” Mr Bach said before the report. “Investors may be broadening their parameters just a little bit.”
The Moody’s/Real index is still 43 per cent below its October 2007 peak.
While the number of repeat sales had only a “slight uptick” in September, the dollar volume of those transactions doubled from August to US$3.7 billion (US$4.8 billion), according to Moody’s – the largest volume since January 2008.
Apartment buildings have led prices higher, rising almost 16 per cent in the third quarter from a year earlier, Moody’s reported. An index of retail properties fell about 12 per cent in that time, while industrial buildings dropped 1.2 per cent. Office property values increased 4.4 per cent.
Source : Today – 23 Nov 2010