Commercial Real Estate Sales, Values Dropping

Commercial real estate prices fell 2.3 percent in March, according to the Moody’s Real Commercial Property Price Indices (Real CPPI). Despite the decline, the index grew 0.9 percent year over year since March of 2007, according to the rating agency.

The Real CPPI includes four categories of commercial properties. The value of the Retail Index fell 5.7 percent in the first quarter of 2008 compared with the same period a year ago. The Apartment Index is down 3.4 percent in a similar first quarter comparison, while Offices declined 2.0 percent, and the Industrial index fell 2.3 percent.

Transaction volume for properties was down about one-third as measured by volume in March 2008 compared with March of 2007. By dollar value, commercial property transactions were down by one-half March to March, Moody’s reported.

Sales in March 2008 were more likely to occur with lower-valued properties. Nearly 63 percent of all sales were for properties valued under $7.5 million, compared with less than half in March 2007.

“In a credit-constrained environment, lower priced assets have less difficulty finding financing than do pricier ones,” said Moody’s Senior Vice President Sally Gordon in a statement. “A larger share of the completed transactions fall within the smaller price categories.”

Moody’s Real CPPI are based on repeat sales of the same properties across the country at different times.