Commercial real estate prices fell 1.7% in March and they are down 20.8% from year-ago levels, according to a measure of property prices published by Moodys Investors Service on Tuesday.
Moodys REAL Commercial Property Price Indices showed that March prices of properties such as office buildings, malls and apartment buildings are off 22.8% from a peak in October 2007.
Sales volumes too have dropped dramatically. According to Moodys, commercial real estate sales volumes were off 75% to 80% in March from year-ago levels.
The drop in sales and prices comes amid a downturn in the nation's economy that has tested many assumptions about the income many properties can generate. Also, sales volumes have been eroded by a drop in the number of lenders because Wall Street's securitization of commercial real estate mortgages has come to a dead halt. No new transactions in the CMBS market have been priced since June 2008. Moody's expects continued weakness and possibly further declines in volume in the coming months.
When it comes to specific properties, the credit rating agency said office building prices are off 30% from peak levels. In the first quarter of 2009, office prices declined 20%, while apartment and industrial property prices were little changed. Prices of retail properties, meanwhile, plunged 14% in the first quarter.