Commercial property prices rise 1% in August

Commercial real estate values rose in August, driven higher by multifamily property sales growth and rising prices in secondary and tertiary markets, according to Real Capital Analytics’ Commercial Property Price Indices. In August, the U.S. National All-Property Index rose 1.0 percent from the previous month and 7.7 percent year-over-year.

Prices in secondary and tertiary markets are accelerating, compared with those in primary markets, according to the index series. RCA notes, “The pace of annual growth has accelerated in the Non-Major Metros over the past year, while the 6 Major Metros pace has cooled.” Although prices rose 6.1 percent year-over-year in primary markets (Boston, Chicago, Los Angeles, New York City, San Francisco, and Washington, D.C.), prices rose 8.1 percent in secondary and tertiary markets.

Looking at property types, the strongest growth was in the apartment sector. Multifamily property prices in August are up 12.3 percent, year-over-year, with a rise of 1.2 percent from July. Industrial prices, which fell slightly during the summer, rose 0.3 percent from the previous month and are up 5.4 percent year-over-year. Retail property prices increased 0.3 percent in August and are up 2.1 percent over the past 12 months.

The office sector saw growth in both CBD and suburban office from the previous month, each up 0.7 percent from a month earlier, but suburban office price growth continues to outpace CBD office prices on a year-over-year basis. Suburban office prices are up 9.1 percent over the past 12 months, while CBD office prices are up 1.7 percent year-over-year.