Tags: Commercial | Property | Prices | Jump

Commercial Property Prices Jump Most on Record

Monday, 22 Nov 2010 11:18 AM

U.S. commercial property prices rose 4.3 percent 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 percent from a year earlier as high-priced deals drove up values, Moody’s said in a statement today. The measure had fallen to an eight-year low in August.

“Each of the summer months this year recorded declines in the 3 percent to 4 percent range, followed by this month’s sizeable uptick,” Nick Levidy, a Moody’s managing director in New York, said in the statement. “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 Robert Bach, chief economist for Grubb & Ellis Co., a Santa Ana, California-based commercial broker.

“The demand is still focused at the core end of the spectrum,” Bach said before the report. “Investors may be broadening their parameters just a little bit.”

The vacancy rate for U.S. office buildings rose to 17.5 percent in the third quarter, the highest since 1993, from 16.6 percent a year earlier, according to New York-based property research firm Reis Inc.

Moody’s measures overall commercial property values on a monthly basis and breaks the numbers down by property type once each quarter. The index measures the changes based on repeat sales transactions.

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U.S. commercial property prices rose 4.3 percent 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 percent from a year earlier as high-priced deals...
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2010-18-22
Monday, 22 Nov 2010 11:18 AM
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