The latest numbers from the Moody's/REAL Commercial Property Price Index (CPPI) show that prices bounced up for the second straight month as CRE values slowly recover. The results have not yet been posted to the MIT site linked above. Moody's put out a press release this morning with the advance results of the index. The Wall Street Journal has a brief write-up on the results. The forecast remains choppy. So don't expect the index to repeat the pattern of growth exhibited from 2001 through 2007. It seems more likely we'll see fits and starts as values bounce along near the bottom that has now formed in prices barring some cataclysm that perpetuates a new drop.
U.S. commercial real estate prices rose 3.6% from a month earlier in May, the second-straight increase, but prices are expected to remain "choppy" near-term, according to Moody's Investors Service.Prices in the sector have stabilized somewhat after slumping nearly 40% from the highs of several years ago as the credit crunch and falling occupancy rates and rents hurt the ability of property owners to deal with their mortgages. Meanwhile, demand for space in offices and malls and rooms in hotels and apartment complexes remains far below pre-recession levels.
"The positive news of increasing prices over the past two months is tempered by low transaction volumes, forecasts for slowing macroeconomic growth and the rising risk of a double dip recession," said Moody's managing director Nick Levidy.
Transaction volume nearly doubled from a month earlier in May to $1.5 billion, but the number of sales was 6.1% lower.
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