Commercial real estate prices, as they are measured by Moody's Investors Service/Real Capital Analytics (RCA) Commercial Property Price Indices (CPPI) national all-property composite, remained flat in March.
According to Moody's, after recovering 28.2% since January 2010's pricing trough and retracing roughly 47% of its peak-to-trough dip, price appreciation has decelerated. It has only advanced by 1.8% in the last three months, the rating agency said.
"Commercial property price appreciation decelerated during the last three months following a series of strong gains after the trough roughly two years ago," says Tad Philipp, Moody's director of CRE Research. "The increased cost and decreased availability of capital market debt in the wake of ongoing Euro area sovereign stress has filtered its way into the prices of recently closed transactions."
Comprising a group of 20 indices, the Moody's/RCA Commercial Property Price Indices is a new series measuring price changes in U.S. CRE by looking at advanced repeat-sale regression analytics.
The indices utilize deal data from RCA as well as a methodology developed by David Geltner, an MIT professor, together with the rating agency and RCA.
The new report Moody's/RCA CPPI: Recovery Decelerates: May 2012 is the first monthly report on the new Moody's RCA CPPI.
Among the national all-property composite segments of the CPPI, Moody's said that the growth in apartment prices has considerably outpaced that seen in the core commercial property types in the previous 12 months, with apartment prices rising 18% against 10%.
Improving apartment fundamentals and the continuous flow of attractively priced debt capital from the GSEs have resulted in the better performance.