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Moody’s/RCA: CRE Prices Fell in April, Major Markets Lead Recovery

Commercial real estate prices fell in April across nearly all sectors, according to the Commercial Property Price Index from ""Moody's"":http://www.moodys.com/ and ""Real Capital Analytics"":http://www.rcanalytics.com.

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The CPPI, composed of 20 indices, showed that CRE prices in the United States were down 0.6 percent in April.

Prices fell across all sectors of the CPPI with the exception of the industrial sub-sector, which saw a price gain of 1.1 percent. Compared to the last quarter, the industrial sector posted the biggest gain of 3.9 percent, but that gain still lags the recovery in the core commercial sector of which it is a part.

""A broad price recovery in commercial real estate prices has been effectively stalled since fall 2011,"" said Tad Philipp, Moody's director of commercial real estate research. ""Even apartment prices in both major and non-major markets have settled down after leading in price recovery since the financial crisis.""

Apartment prices ended up down 1.2 percent in April after coming up by 37.4 percent from their low in January 2010. Apartments in major markets started recovering in 2010 and have since come back up 82 percent of their peak-to-trough decline, the strongest recovery among all the sub-sectors of the CPPI. The suburban office sector in major markets has seen a significant setback to its still-young recovery, falling by 14.4 percent over the last five months.

In non-major markets, the apartment sector had a fairly strong performance, but it still paled in comparison to major market performance. The central business district office sector has shown little recovery progress. Despite being the first sub-sector to hit its post-crisis bottom, it has retraced only 7.5 percent of its peak-to-trough decline.

In the major markets, prices across sectors for non-distressed properties have recovered to 90.9 percent of peak levels. Distressed transactions are showing price recovery, up 27.8 from their trough 19 months ago. Distressed transaction prices in non-major markets continue to flat line.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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