US commercial real estate price growth slows in May

US commercial real estate price growth slows in May

US commercial real estate price growth has slowed in may due to the impacts of COVID-19 pandemic crisis. According to the latest Real Capital Analytics RCA CPPI (Commercial Property Price Indices) report, the US National All-Property Index slowed to a 4.9% YOY increase, the slowest pace of growth since 2011.

Even as deal volume tumbled beginning in March, price growth did not start to markedly slow until the past month, said in the report.

The office sector fared the worst in May, posting negative returns on the month and quarter, down 0.3% and 0.7% respectively. Over the last year the index gained only 1.6%. Questions about the future need for office space have arisen during the pandemic as companies have
become accustomed to a remote working environment.

Industrial property price growth cooled in May, up 0.2% from April and slowing to 6.1% annual growth. This index posted steady double-digit yearly gains for most of 2019 and was growing at nearly twice its current clip this time last year.

Apartment market price gains slowed in May, up 0.3% on the month, but still posted the fastest annual growth of any sector, up 9.3%. Retail properties also maintained slow but steady growth, up 0.2% monthly and 2.8% YOY.

Price growth in both the 6 Major Metros (6MM) and Non-Major Metros (NMM) has eased, but prices in the major locales have taken a larger hit recently. Both indices were tracking the same growth rate for most of 2019, but the 6MM index slowed to a 3.4% increase in May, while the NMM index gained 5.3%.

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.

US property price growth