Commercial Real Estate Pricing Trends for 2012

There seems to be mixed results with the commercial real estate pricing trends this year.  It appears that the General Commercial sector is rising, while the Investment Grade is decreasing.  However, one fact is certain, and that is that we are continuing on with recovery in this field.  According to CoStar the steady increase of the General Commercial sector is the main clue that the recovery is continuing.

Here are a few important facts that were found in the April release by the CCRSI:

·   Due to a dip in Investment Grade pricing, the US Composite index showed a decline of 1.3% in February 2012.

·   The Investment Grade index showed a decline of 6.6% in February.

·   The three major commercial property types are office, retail, and industrial, and they have been positive in net absorption of both general commercial and investment grade.

Even though the Investment Grade index declined 6.6% in February 2012, that actually is a trend.  Typically the Investment Grade shows a decrease within the first 2 months of the year.  Although the trend may suggest otherwise, investment grade properties have increased 11.5% since 2009.  These investment grade properties seem to be doing better than the general commercial properties.  

Although it has remained relatively consistent, the General Commercial index has shown improvement over the Composite index.  CoStar states that a reason for this is partly because of the increase in demand for general commercial properties, and a diminishing higher end of the market to net absorption. The good news is that the increasing absorption of general commercial properties is not a sporadic event.  The results show this to be a steady increase that can be expected to hold.