According to the latest report from MSCI Real Assets, commercial property prices experienced another decline in November compared to the previous year. The RCA CPPI National All-Property Index showed a 0.5% decrease, but this is an improvement from last year’s 7.4% decline during the same period. In fact, November marks the sixth consecutive month of price increases with a 0.3% rise.
MSCI Real Assets attributes much of this market downturn to high borrowing costs; however, other factors such as changing tenant preferences have also played significant roles in driving down prices across various sectors.
In terms of office properties, both suburban and CBD offices saw slower annual declines in November with suburban offices falling by only 0.8%, and CBD offices declining by just 12%. On a monthly basis though, CBD office prices actually increased by 0.4%, indicating an annualized increase of around 5%. Despite these improvements since their peak in March of last year (a drop of nearly half for CBD offices and about one-sixth for suburban), they still face challenges unique to each sector.
Industrial properties have been more resilient throughout this downturn due to strong demand from e-commerce and supply chain shifts; they even reached a new high with a yearly gain of about five percent according to MSCI Real Assets’ report.
Apartment pricing has not fared as well during this time period – dropping twenty percent since July two years ago – but did see some relief on an annual basis with only a decrease rate at -5/7%.
Retail property values finally saw some positive movement after two years when it posted its first yearly gain at .07%; October had seen gains too (.05%), which would translate into almost seven times that amount if that trend continued annually!
Overall though despite these small victories here or there depending upon what type you’re looking at specifically within commercial real estate markets nationwide we are seeing signs pointing towards stabilization.
