CRE values continue to fall fast and are quickly catching up with the drop in residential values. The Moody’s/REAL National All Property Type Aggregate Index is out today and shows the values of offices, apartments, hotels, warehouses and malls have dropped to September 2004 levels.
Moody’s/REAL Commercial Property Price Index (CPPI)
From the WSJ: A few months ago…commercial real estate values had fallen to 2005 levels. The latest news: values have fallen back another year.
“There’s all this talk of green chutes, people saying the second order of employment data is positive,” said Neal Elkin, president of Real Estate Analytics, LLC…“We’re in a situation now where our second order of returns [for real estate] is sharply negative. That’s a little intimidating.”
The index hit 135.31 in April, down 8.6% from March and 25.3% from 2008. (100 on the index equals December 2000 prices.)
Declines were steepest in the South, which was the worst performing region overall. All four property types saw annual value declines of more than 20%, with industrial measuring a decline of 28.8%.
April’s large price deterioration hints at an ongoing process of capitulation.