The Real Deal New York

US commercial property values slipped slightly in March: report

Cap rates continue to flatten while transaction activity slips, according to Green Street Advisors

April 07, 2016 02:40PM
By Rey Mashayekhi

Green Street Advisors March 2016

Green Street Advisors’ Commercial Property Price Index

Citing a continuing slowdown in both transaction volume and value appreciation, Green Street Advisors’ national index of U.S. commercial property values fell slightly in March to the tune of less than one-half percent, the real estate research and advisory firm said Wednesday.

As in previous reports, Green Street noted that capitalization rates “have flattened out over the past few months,” corresponding with property appreciation having “slowed materially from the pace of last year” and a related decline in transaction activity.

Though the current commercial real estate cycle has seen property values eclipse their pre-recession peak in 2007, according to Green Street, the slight decline in the national property index feeds into previous forecasts that the cycle may reach its conclusion in 2016.

But despite indicators playing into that narrative, Green Street senior analyst Peter Rothemund said that property values at large “appear to be holding their ground” thanks to financial and securities markets that have stabilized.

“Though that seemed an unlikely proposition a month or two ago, the rally in the financial markets and the return of some normalcy to the [commercial mortgage-backed securities] market have helped property pricing,” Rothemund said.

Green Street’s Commercial Property Price Index remained up 8 percent year-on-year in March and 23 percent above its previous peak in August 2007.

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