US commercial property price growth accelerates in June

US commercial property price growth accelerates in June

U.S commercial property price growth accelerated in June, led by the apartment sector, according to the latest Real Capital Analytics CPPI (Commercial Property Price Indices) report.

The US National All-Property Index rose 9.8% over the last year, the fastest rate since 2015, and 0.8% from May.

Apartment sector price growth, which had dipped as low as 6.9% during 2020, accelerated to 12.0%. Deal activity in this sector has gone beyond the recovery phase and in Q2’21 was at a record high level for any second quarter period.

Industrial property pricing, too, reflects an in-demand sector. In the second quarter, deal activity for individual assets was almost double the average of the pre-pandemic period, a notable sign of strength for the market. The industrial price index rose 9.8% from a year ago, staying in the 9%-10% range seen since the crisis began.

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The office sector index rose 6.0% in June compared to the year prior, the best performance since 2018. Suburban office prices continued to lead the way, posting a 7.7% YOY growth rate. CBD office prices again declined, falling 2.4% annually.

Retail prices rose 3.2% YOY. While this rate is an improvement from the pace seen in recent quarters, it is still below the overall pace of inflation in the U.S. economy. The retail property price index rose 0.5% from May.

Prices in the Non-Major Metros increased 10.5% from a year ago, the second straight month of double-digit annual gains. Price growth in the 6 Major Metros accelerated to 5.7% but continued to significantly lag the Non-Major pace.

The 6 Major Metros (6MM) are Boston, Chicago, Los Angeles, New York, San Francisco and Washington DC. Non-Major Metros (NMM) refers to all secondary and tertiary markets.