Moody's Investors Service says its gauge of commercial property prices rose 1.3 percent from September to October, marking the second consecutive monthly increase recorded by the New York-based research firm.
According to the Moody's/REAL Commercial Property Price Index (CPPI) released this week, as of the end of October, commercial real estate prices nationally were up 3.2 percent from their year-ago levels. Even with the recent gains, the index is down 34.4 percent from two years ago, and is 41.9 percent below the peak values reached in October 2007.
""We expect commercial real estate prices to remain choppy until transaction volumes pick up,"" said Nick Levidy, Moody's managing director. ""Low volumes suggest that the bid-ask spread for commercial real estate is still very wide.""
Levidy also observes that price increases in October were in spite of the fact that October had the second highest percentage of distressed loans in the history of the CPPI, totaling 30 percent of the repeat-sale transactions.
In October there were 110 repeat sales. Dollar volume of the repeat sales on which the index is based was $1.4 billion.
In additional indices published by Moody's this month, the Eastern region of the country showed large gains over the past year in office and retail, smaller gains in apartments, and a decline in industrial.
The Southern region recorded annual gains in apartments and industrial, with office and retail experiencing negative returns.
The four property types in Southern California also showed mixed results, with industrial and office posting positive returns and apartments and retail in negative territory.
Florida apartments have posted a 33.5 percent increase in prices over the last four quarters, regaining a good portion of the value they lost last year when prices dropped 46.1 percent, according to Moody's.
Moody's/REAL Commercial Property Indices are based on the repeat sales of the same properties across the U.S. at different points in time. Moody's says applying price changes measured in this way circumvents the distortions that can occur with commercial property value measurements such as appraisals or average prices.