A three-year-in-the-making commercial real estate market recovery combined with fresh demand for apartments and office properties continue to push the Commercial Property Price Indices up and CMBS default rates down, according to Moody’s.
Major market apartment and office property prices are the first of Moody’s 20 Commercial Property Price Indices to surpass their 2007 and 2008 peaks. Major market office prices are 3% above their December 2007 peak level.
Major market apartment prices “are 6.9% above their January 2008 peak level.” In March alone apartment prices in these markets increased by 1.5%, “while core commercial prices” remained unchanged.
Comparatively, Moody’s March indices show the national all-property composite index increased by only 0.4%.
“A strong and almost uninterrupted recovery” starting in late 2009, early 2010 when commercial property prices hit bottom, explained Moody’s director of commercial real estate research, Tad Philipp, created “a tail wind for the resolution of
The report shows the recovery rate for CMBS loans resolved with a loss greater than 2% during the first quarter increased approximately 25 percentage points compared to the recovery rate seen in January 2010 when the national commercial property price index increased by nearly 35%.
Analysts credit the 12.5% year-over-year increase in apartment prices as the main driver of the national all-property composite by 6.2% over the last 12 months.
