Report shows how much commercial real estate has fallen

Two exceptions: Apartment buildings, industrial properties are up this year

Commercial real estate indices were down compared with this time last year, but buyers still aren’t selling — yet (iStock)
Commercial real estate indices were down compared with this time last year, but buyers still aren’t selling — yet (iStock)

The economic toll on commercial real estate shows no signs of abating as the health crisis lingers.

Indexes for office, retail and lodging properties were all lower in July than they were a year ago, according to analytics firm Real Capital Analytics, Bloomberg reported. Deals were also down, with transaction volume across all sectors plunging 69 percent to $14 billion.

Hotel prices declined 4.4 percent from the beginning of 2020 through July, while retail fell 2.8 percent and offices fell 0.9 percent, the firm calculated. But there were bright spots: Apartment building prices rose 6.9 percent and industrial values climbed 8.3 percent, contributing to a 1.5 percent increase for all property types during that period.

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While many lenders have allowed borrowers to defer mortgage payments, landlords have been reluctant to lower prices and shed assets. That dynamic may change soon as the economic crisis continues and debts mount.

“I wouldn’t be surprised if we start to see some of it start to break in September or October,” said Jim Costello, senior vice president at Real Capital Analytics. [Bloomberg] — Georgia Kromrei