Moody’s/real commercial property price INDEX declines 7.6% for May

Moody’s/REAL Commercial Property Price Indices (CPPI): a monthly report from Real Estate Analytics LLC on recent investment activity and property sales trends in US commercial real estate.

  • Transaction Volume at its Lowest Level
  • Index Stands 28.5% below April 2008 Levels; 34.8% below peak of October 2007

The Moody’s/REAL National All Property Type Aggregate Index from Real Estate Analytics, LLC, (REAL), measures 125.04 for May 2009, a decrease of 7.6% from the previous month representing the second largest one-month decline after April’s 8.6% decline.  The Index, which has captured price data through the end of May 2009, is now 28.5% lower than it was a year ago and 34.8% below the peak measured in October 2007.  The index also indicated a 32.6% drop in prices over the past two years.

“We cannot underestimate the enormity of what the data has represented in the past two months,” said Neal Elkin, President of REAL. “The fact that this month’s price decline is less than last month’s price decline might be seen as a positive sign in some circles. It could suggest that bottom in prices maybe starting to form, however, we need see higher transaction dollar and deal volume in order to draw a more would definitive conclusions.”

Transaction volume in the overall market has fallen to its lowest level yet. There were 282 transactions capture by REAL in May and of those, 52 were qualified as repeat-sales transactions to be incorporated into the calculation of the index. May marked a new low for both dollar and volume deals. The data indicated that distressed sales are almost certainly starting to exert downward pressure on the returns. In addition, rising mortgage interest rates have most likely derailed or postponed some deal closings. According to REAL, the apartment sector felt the brunt of this effect, leading to a collapse in volume greater than any other property type for the month of May.

Moody’s/REAL Commercial Property Indices are owned by Real Estate Analytics, LLC, and provides the only investable, transaction-based commercial real estate benchmarks available in the United States.

The All Property Type Aggregate Index is measured monthly, while national and regional data by property type are measured quarterly. Changes in quarterly indices, if any, will be reported in May 2009.

To read the full report, please visit www.realindices.com

About Real Estate Analytics LLC (REAL)

Real Estate Analytics LLC (REAL) provides world-class, real estate capital markets solutions that address the needs of investors, property owners, lenders and banks to more effectively utilize real estate as an asset class.  REAL has developed a full suite of US commercial real estate price indices based on transaction data from Real Capital Analytics and has teamed with Moody’s to publish them as Moody’s/REAL Commercial Property Price Indices.  For more information, visit www.realindices.com

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