All sectors of the commercial real estate market showed signs of stabilization or slight improvement in 1Q11, according to Moody’s Investors Service Red-Yellow-Green quarterly property assessment.
The overall composite score rose two points, moving to Green 67 from Yellow 65. According to Moody’s, the Red-Yellow-Green assessment measures markets on a scale of 0 (weak) to 100 (strong), with scores of 0-33 classified as Red, 34-66 as Yellow, and 67-100 as Green.
Multifamily continued to be the highest-scoring sector, staying at Green 88. Moody’s reported that 59 of 63 of these markets across the nation are now identified as green, with Newark scoring the highest at Green 96. Miami, Portland (Oregon), and Ventura County (California) were all close behind at Green 94. The vacancy rate slightly declined to 5.9% from 6.0%.
Similarly, retail maintained a score of Yellow 64, but also saw vacancy rates rise modestly by 0.1% to reach 13.1% for the quarter. Moody’s identified San Francisco as the strongest individual retail market at Green 88.
Central business district (CBD) rose by four points to Green 70, marking the first the sector has been in Green since 1Q08. Despite the positive news, vacancy rates also jumped to 13.2% from 12.9% in the previous quarter. Fort Worth and New York continued to score the highest in this sector with both at Green 87, according to the report.
Continuing the broad market trend of improvement, suburban office space scored four points higher as well, reaching Yellow 52 from Yellow 48. While the vacancy rate stayed high at 18.2%, it continued its modest decline down from 18.3% last quarter. Nashville remained the top individual market, scoring Green 78.
The industrial sector stayed at Yellow 61, with the vacancy rate falling to 14.1% from 14.3%.
Moody’s also ranked the cities with the most CMBS, based on dollar volume, listing Los Angeles, San Francisco, and New York as the top three with scores of 78, 76, and 73 respectively.
The five highest scoring U.S. markets were Honolulu (83), Los Angeles (78), San Francisco (76), Orange County (75), and New York (73).
Conversely, the five lowest scoring U.S. cities were Edison, NJ (52), Phoenix (51), Sacramento (51), Columbus (47), and Detroit (42).