The pace of decline in US commercial real estate (CRE) prices slowed in December, according to the latest Real Capital Analytics CPPI (Commercial Property Price Indices) report.
This was led by improvements in the industrial sector, says the report.
The RCA CPPI National All-Property Index fell 5.9% from a year ago and was little changed from November. At the end of the third quarter, prices had been falling at a 10.3% YOY rate.
The industrial index was the only property type to post annual or monthly price growth in December. Industrial prices rose 0.5% from a year earlier and 0.3% from November.
High mortgage costs have subdued deal activity and property pricing through most of 2023 but talk by the Federal Reserve of easing rates appears to have influenced property pricing more recently.
Prices in the apartment sector declined 8.4% from a year ago and were little changed relative to November. The pace of decline has been decelerating in recent months and the annualized change in December from November suggests just a 0.2% drop.
Apartment prices now sit 15.0% below their all-time high in July of 2022.
The retail sector index fell 5.5% YOY in December. Retail prices have slid for 17 months in a row, coming off an all-time high that also occurred in July of 2022. On the month, retail prices fell 0.1%, which when annualized would be a decline of only 0.6%.
The office sector registered the largest monthly and annual declines of the property types due to challenges with tenant demand
and a contraction of deal activity. CBD office prices fell 29.2% from a year ago and suburban office prices dropped 13.2%.
Total U.S. deal volume fell 51% in 2023, the sharpest year-over-year pace of decline since 2009, as reported in the new edition of US Capital Trends. All the major property types posted double-digit declines in sales volume in the fourth quarter.
