Monday, June 27, 2011

Commercial real estate prices dip

NEW YORK – June 27, 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: U.S. Commercial Real Estate Prices Fall 3.7 Percent in April,” The Wall Street Journal, Melodie Warner (June 23, 2011)

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