Commercial real estate prices were up more than 5% nationally at the end of March from the same time last year, according to Standard & Poor’s March GRA Commercial Real Estate Indices.

The S&P/GRA indices look at commercial real estate prices from 10 different perspectives, including nationally, by geographic regions, and by property type. Nationally, commercial real estate prices gained 5.1% through the end of March from the previous period a year ago, but were down 0.1% from February 2008 levels, according to S&P. For comparison purposes, the national index peaked at 14.5% in June 2006. S&P’s index values are based on a three-month rolling average transaction price per sq. ft. on closed transactions.

“Overall, the results for commercial real estate were modest for the month,”says David Blitzer, chairman of the index committee at S&P. “The Western regions significantly outperformed their Eastern counterparts this month. The region that showed the most weakness in March was the Northeast, down 1.4%. On the positive side, the Pacific West returned 1.7% for the March/February period and has the highest return over the past year.”

Three of five regions showed positive monthly returns. The Midwest was up 0.7%, and the Desert Mountain West region gained 1.0%. Besides the Northeast, the Mid-Atlantic South was down 0.1%, compared with February 2008.

S&P attributes the decline in the Northeast to price changes in the New York and Boston multifamily, office, retail and warehouse sectors. This was offset somewhat by price gains in Washington, Baltimore and Philadelphia multifamily, office and retail properties.

Gains in the Pacific West were largely the result of price changes in the Los Angeles, Orange County, Riverside, San Bernardino and San Diego multifamily, office, warehouse and retail property sectors.

Breaking down the performance for different property types, Blitzer says, “In the property sector warehouse was the star performer during the March/February period, up 0.9%. The other three property sectors reported small positive returns. Confirming that a turnaround may be taking place following a weak 2007, apartments are showing the highest one-year return since March 2007, up 7.7%.”

The multifamily sector peaked in August 2006 at 16.6%, S&P reports, and declined as much as 3.5% in June 2007, with the March 2008 return of 7.7% showing a recovery.

Multifamily properties have held steady since February. Fundamentals in the sector are holding up across most major metropolitan areas, taking into account slowdown in job growth, falling home prices and rising affordability of home purchases.

However, growth in rents has started to slow even though apartment vacancy rates in most markets remain below normal long-term levels. Another factor supporting multifamily fundamentals is that permits issued for multifamily construction have continued to drop over the last 12 months. In March 2008, taking into account five-unit plus communities, the annual number of permits issued totaled 274,000 units, down more than 26% compared to the 371,000 issued in March 2007.

The warehouse sector benefited in March due to price gains in the Pacific West region, the Mid-Atlantic South, some parts of the Northeast, and in Chicago. This was offset somewhat by downward trends in Washington, Baltimore, Philadelphia and some parts of the Midwest.

Office properties were up 0.1% in March from the previous month, and retail properties gained 0.3%.