Interesting Times

The Moody’s/REAL Commercial Property Price Index fell 0.5 percent from February, the second straight monthly decline, Moody’s Investors Service Inc. said today in a report. Prices slid 25 percent from a year earlier and are down 42 percent from the October 2007 peak.

“This is continued bad news for property owners,” Christopher Cornell, an economist at Moody’s Economy.com in West Chester, Pennsylvania, said in a telephone interview. “The trend is basically flat prices.”

Economic growth in the second half of 2009 and first quarter of 2010 helped lift prices for offices, warehouses and stores from lows set in October. Property sales jumped 50 percent in the first quarter from a year earlier to $15.4 billion, Real Capital Analytics Inc., a commercial real estate research company in New York, said April 22.

The rental market has lagged behind, with landlords struggling to fill empty space and raise rents. U.S. office vacancies rose to 17 percent in the first quarter, the highest level since 1994, while asking rents fell 0.8 percent, according to New York-based research company Reis Inc.

Retail property prices in the top 10 metropolitan areas fell 19 percent in the first quarter from the last three months of 2009 and office prices dropped by 7.2 percent.

Nationwide, office prices declined 3.2 percent and retail prices slumped 4.7 percent. Cornell called the retail performance “dismal.”

“It’s not the brilliant consumer recovery story,” he said.

Apartment values rose 3.3 percent in the first quarter from the prior quarter and industrial real estate gained 0.8 percent.