Moody’s has just released its April Moody’s/REAL Commercial Property Price Indices (CPPI) update and it’s depressing. Commercial real-estate prices fell 8.6% in April from a reading of just -1.7% in March.
From the WSJ: “The size of April’s decline, following a 5.5% decline in January…suggests that sellers are beginning to capitulate to the realities of commercial real-estate markets,” says Moody’s Managing Director Nick Levidy. He added more distressed sales appear to be occurring.
The monthly decline, which leaves prices down one-quarter from a year earlier, continues the losing streak for the commercial real-estate sector, which had held out longer than residential real estate…
Overall sales volume also fell sequentially in the month to 285, the lowest level since Moody’s began tracking the figures in 2000.
By region, apartments are holding up the best in the East, down 12%. The South, the worst-performing region over the past year, saw declines of more than 20% in all sectors.
The three major office markets – New York, San Francisco and Washington – suffered declines as well, with Washington posting the biggest year-over-year fall at 21%. New York and San Francisco had declines of 13% and 20%, respectively.
According to Moody’s, April’s decline leaves the CPPI index at 25.3% below its level a year ago and 29.5% below the peak in prices measured in October 2007. Once capitulation in CRE is fully realized by the market, the bottom will eventually be torn out, and that’s not going to be pretty.