(NEW YORK) US commercial property prices fell 21 per cent in March from a year earlier and may fall further in the recession, Moody's Investors Service said.
Prices are now down almost 23 per cent from the October 2007 peak and transactions have dropped as much as 80 per cent, according to Moody's/REAL Commercial Property Price Indices issued on Tuesday. Price fell 1.7 per cent in March from February.
'Moody's expects continued weakness and possibly further declines in volume in the coming months,' the ratings company said in a statement.
Commercial real estate sales have fallen the US as banks have curtailed lending in the credit crisis. The economy has lost 5.7 million jobs since January 2008, reducing demand for office space and driving down property values.
Office prices dropped 30 per cent from their peak, including a decline of almost 20 per cent in the first quarter, Moody's said. Retail property values fell 13 per cent, while apartment and industrial prices remained about flat.
Commercial property prices in the top 10 metropolitan areas in the US outperformed the rest of the nation. Office prices in those markets, which include New York, Los Angeles, Atlanta, San Francisco, Dallas and Washington, fell 6.8 per cent this quarter from last quarter.
'Office prices in the top 10 cities peaked at the same time as the nation, the second quarter of 2007, but thus far have fallen less than half as much,' the report said.
Retail properties in the top 10 markets declined 14 per cent, 'slightly' underperforming the nation, Moody's said. Apartment prices in those markets were down 3.1 per cent in the quarter.
The Moody's/REAL indexes are based on repeat sales of properties. -- Bloomberg
Source: Business Times, 21 May 2009