According to a new report from the Moody's investment service, the US commercial property recovery has slowed in the past 3 months. The firm puts it down to continued concerns over the EU debt crisis and the toll this concern is taking on appetite to lend on commercial transactions.
That said, the Moody's/RCA all-property composite index shows a growth of 12% year on year in March and is flat on the month according to Moody's. However, recent price gains slowed drastically in Q1, with prices up just 1.8% since the end of 2011.
According to Moody's the US commercial property market bottomed in January 2010 and since then prices have grown by 28% said the firm. The data shows multi-family housing as leading the recovery, fuelled by the rental boom in the sector.
Multifamily building prices rose 18 percent in the 12 months through March, the strongest performance for the year among all index components, according to the report. Apartment properties in major markets have recovered 87 percent of the value lost since their trough in December 2009, Moody's said.
"The increased cost and decreased availability of capital markets debt in the wake of ongoing euro-area sovereign stress has filtered its way into the prices of recently closed transactions," Moody's said. "Apartment prices in major markets have shown the strongest recovery."
Meanwhile suburban offices posted the worst performance in March, with prices down 3.5% since February.
Moody's glass is always half empty. Around the world the performance listed above would be focussed upon because it is very positive, yet Moody's would rather report on how it is slightly worse than the previous index.
That said one can only expect a slowdown in the recovery with the European debt crisis continuing and the rolling out of the Basel III banking reforms closing down commercial property lending across Europe and elsewhere.
- Wednesday 30 May 2012