Loopnet News reported today on the Moody’s/Real Commercial Property Price Indices and I found some reason to be encouraged. Values for Commercial Buildings (warhouses, offices, retail and apartments) were up in January for the 3rd month in a row and the December values spiked 4% over November — the largest month-to-month spike in the indices’ history. This is good news compared to the trend we’ve been in
Despite gains in recent months, January pricing for the all-property index was still down 38.7% from January 2008 and 40.2% lower than its peak in October 2007.
Industrial properties led all sectors in price drops over the past two years, as pricing for all of 2009 was down 33.9% from 2007. Multifamily was down 31.2%, office 30.6% and retail 25.9%.
The bad news is that transaction volume is light and the authors of the report feel that until banks and the FDIC start unloading troubled assets en masse, we won’t see a new pricing paradigm take hold. Up until now, lenders have been willing to restructure and extend debt rather than foreclose. We saw this same strategy in the land sector in 2008 and 2009 — only now does the faucet appear to be opening for a high volume of sales in distressed land assets. Watch the WSJ and Atlanta Business Chronicle for a major sealed bid land sale to be held by the FDIC in the coming weeks.
