US property market looking positive as three indices show year on year gains

The Moody’s/REAL Commercial Property Price index is now 0.3% up from a year ago as a small number of high-priced deals drove up values after falling to an eight year low in August.
 
But the Moody’s/REAL index is still 43% below its October 2007 peak. The gauge measures overall commercial property values on a monthly basis and breaks the numbers down by property type once each quarter.
 
The changes are based on repeat sales transactions. While the number of repeat sales saw only a slight uptick in September, the dollar volume of those transactions doubled from August to $3.7 billion, according to Moody’s. That was the largest volume since January 2008, the company said.
 
The biggest single property sale to close in September was a $208 million deal for Union Bank Plaza, a 627,000 square foot office building on South Figueroa Street in Los Angeles, according to Real Capital Analytics.
 
Apartment buildings have led prices higher, up almost 16% in the third quarter from a year earlier, Moody’s also reported. An index of retail properties fell about 12% in the same period while industrial buildings fell 1.2%. Office property values increased 4.4%.
 
Office prices in the top 10 metropolitan areas increased 22% in the third quarter from a year earlier, the most of any property type in major cities. Prices gained 9.4% from the previous three months.
 
‘Each of the summer months this year recorded declines in the 3 to 4% range, followed by this month’s sizeable uptick. The relatively large swings seen in the index recently are due in part to the uncertain macroeconomic environment and the effects of a thin market with low transaction volumes,’ said Nick Levidy, a managing director with Moody’s in New York.
 
Two other indexes also show national commercial property prices rising. Green Street Advisors, a real estate research company in Newport Beach, California, said that prices increased 24% in the 12 months through to October, but prices are 21% below its 2007 peak.
 
CoStar Group, a real estate data service based in Bethesda, Maryland, 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. Green Street’s index includes deals that are in negotiation or under contract, while Moody’s tracks only closed sales.