In November, the Green Street Commercial Property Price Index experienced a 3% decrease. According to the Newport Beach-based analytics company, this all-property index, which measures pricing for high-quality commercial real estate properties, has dropped by 22% since its peak in March of 2022.
Green Street’s co-head of strategic research Peter Rothemund attributes this decline to a rise in bond yields during September and October that resulted in a stagnant transaction market. However, with bonds experiencing an impressive rally since then and commercial property now being fairly priced compared to corporate bonds, it is possible that property pricing has reached its lowest point.
Over the past year, all but one type of property tracked by Green Street have seen single or double-digit declines in pricing. The only exception was the mall sector where prices saw a slight increase. The most significant drop over the last month was observed in self-storage properties with prices decreasing by 7.6%. From their peak in March of 2022 until now office spaces have experienced a steep decline of 35%, while apartments saw a decrease of around30%. On the other hand,the lodging sector had relatively minor price changes.
This data from Green Street suggests that CRE prices may have hit rock bottom and could potentially start recovering soon.
