CRE Prices Climb Higher, Led by Industrial Assets - Miami Airport Warehouses

Commercial property values continued to climb up in the first two months of the year, according to commercial property price indices (CPPIs) from Moody’s/RCA and Green Street Advisors.

Moody’s reported that in the first month of the year, its national all-property composite index rose by 2.1 percent, while the 12-month jump in values totaled 14.6 percent. Commercial property prices are now about 5 percent above their 2007 peak, Moody’s reports.

Prices on industrial assets in particular have been spiking up, with the industrial value-weighted price composite rising 4.2 percent for the three-month period ending Jan. 31, and 17.8 percent for the 12-month period ending the same date, higher than any other property type. Prices on suburban office properties have also been on a tear, with the sector’s value-weighted composite increasing 2.9 percent for the three-month period and 16.7 percent for the 12-month period. The composite index for the retail sector showed the least growth over the past 12 month, at 9.5 percent, but has been getting stronger recently, with 3.9 percent growth during the three-month period ending Jan. 31.

The Moody’s/RCA CPPI is based on completed “repeat” sales of the same commercial assets.

Meanwhile, research firm Green Street Advisors, which also produces a CPPI focused on institutional-quality assets, reported that its all-property index went up 1 percent in February and 11 percent over the past 12 month. The firm’s researchers reported that “prices for institutional-quality commercial properties are now well above the levels reached at the top of last cycle in 2007.”

Green Street estimates that commercial property values increased 14 percent since the market’s peak in August 2007.

Green Street’s CPPI is based on estimates of private market value of REIT portfolios across the multifamily, office, mall, strip center and industrial sectors.

Source: NREI