Commercial Real Estate Prices Dip

June 24, 2011

Moody's Investors Service is reporting that U.S. commercial real estate prices declined by 3.7 percent during the month of April, as distressed prices masked the price recovery seen in larger, higher-quality assets.

The commercial property sector continues to struggle with slumping demand, and April marks the fifth straight decline in the Moodys/Real Estate Analytics LLC commercial property price index. On the bright side, the price recovery that began a year ago among "trophy properties" in the biggest U.S. markets continued unabated.

Tad Philipp, Moody's director of CRE research, states, "In April, we continued to see a case of where the strong are getting stronger and the weak are getting weaker. Major asset/major market prices have recovered more than half of their post-peak losses, while prices for distressed transactions have continued to bounce around the bottom." Distressed property sales have now made up at least one-fifth of the repeat-sales transaction volume for 17 consecutive months.

Source: “Moody's: US Commercial Real Estate Prices Fall 3.7 Percent in April,” The Wall Street Journal, Melodie Warner (June 23, 2011)

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