US Commercial Real Estate Had a Strong Month

Compared to previous month, commercial real estate prices in the U.S rose by 4.3% in September – the largest month-on-month gain in a decade of keeping records. The Moody’s/REAL Commercial property price index is now up 0.3% on last year, after a small number of high-priced deals drove the index up from an eight year low in August.
The index is still down by 43% since its highest point in October 2007, but it is worth noting that the total volume of transactions in September – $3.7 Billion – is the largest since January 2008, and double the volume of transactions done in August.
The index also breaks properties down by type, and classifies them either as “apartment buildings”, “retail”, “industrial” and “office”. Worth noting is that apartment buildings are up by 16% on the third quarter of 2009, while retail properties fell by 12%, industrial buildings fell by a modest 1.2%, and office properties were up by 4.4%.
Office property prices were up by 22% on last year – the biggest increase of any property type, and it was also up 9.4% on the second quarter of this year.
CoStar Group found that prices for investment grade properties rose 5.5% in September and that values are down 4.9% from a year earlier and 29% from two years ago.
CoStar, unlike Moody’s, tracks transactions below $2.5 million.
The largest single transaction carried out in August was for a deal for Union Bank Plaza, a 627.000 office building in Los Angeles.