Friday, August 14, 2009

Commercial Property Values Off 17 Percent in First Half

Reuters
| 14 Aug 2009 | 02:37 PM ET

U.S. commercial real estate market values fell by more than 17 percent in the first half of the year, outstripping their decline for all of 2008, according to the Investment Property Databank (IPD).

Last year, values fell 12.2 percent, according to the report released Friday.

U.S. commercial real estate values in the first half of 2009 fell more steeply than UK values, said IPD, which analyzes commercial real estate data in global major markets.

"For global real estate investors this may come as a surprise, given that Britain was the most significant real estate market to suffer in 2008," IPD Managing Director Simon Fairchild said in a statement.

U.S. values in the second quarter declined by 6.9 percent, easing somewhat from the 10.8 percent drop in the first quarter, IPD said.

Declines were sharpest in office properties, down 7.8 percent, with industrial properties — warehouse and distribution centers — falling 7.5 percent and apartment building values off by 5.8 percent. Retail properties, such as shopping centers and malls, recorded the shallowest decline, at 5.1 percent.

Year-to-date office and industrial property led the decline, each down 18.2 percent. Apartment building values fell 16.5 percent. Retail was down 14.1 percent.

Returns generated by monthly rent edged up 0.2 percentage point to 1.6 percent, softening the decline in overall returns to 5.4 percent.

"Pressure on market values — in both the US and the UK — appears to be easing, though not necessarily at an end," Fairchild said.