Commercial property prices show across-the-board slowdowns

Prices for commercial real estate assets slid from September to October, according to the newest Commercial Property Price Index (CPPI) report from MSCI Real Assets.

The company’s CPPI National All-Property Price Index was up 7.3% year over year in October but down 0.4% on a monthly basis. On an annualized basis, October’s negative price growth equates to a 4.5% decline.

Most property types saw prices down from September. Year-over-year growth rates slowed in every subsector as capital costs have increased and deal activity has waned. October saw sales volume plunge by a double-digit percentage compared to October 2021, marking three consecutive months of substantial yearly declines.

Asset classes that showed commendable buoyancy through the doldrums of the COVID-19 pandemic are now showing some cracks. The industrial sector logged the best performance with prices up 0.7% month over month and 16.9% year over year, but October was the seventh straight month that the property type’s annual growth rate slowed. Multifamily prices were up 11.3% from October 2021, but down 0.6% from September. Over a full year, this equates to a 7% drop.

Retail asset prices, which had reached a record rate of annualized price growth earlier in 2022, saw their yearly gains retreat to 8.2% along with a monthly decline of 0.3%. Office prices fell back 0.1% from September, with the drop driven chiefly by a 0.3% slide in central business district (CBD) office values. The CBD office index also was weak on a yearly basis with a gain of only 1.9%, the smallest across all asset classes measured by MSCI.


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