The Moody’s/REAL All Property Type Aggregate Index measured a 1.0% price increase in commercial properties in January.
This is the third straight month of positive price returns. In October 2009, commercial property prices hit a low of 107.98, 43.7% below the peak measured in October 2007. Since then, prices have come back 6.3% from that low and are now down 40.2% from the peak.
Commercial property markets are still largely frozen and the wholesale extension of loan maturities by banks and other lenders has delayed the establishment of market-clearing prices on underlying properties.
Commercial property prices have increased in each of the past three months, with January measuring a 1.0% return (see Figure 3). As we mentioned last month, however, a few months of price gains does not necessarily indicate a sustainable trend, particularly in these difficult times. Higher transaction volumes are needed to enhance the price discovery process, and after a brief uptick in volume in December due to end-of-year sales, volume came back down in January.
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