Commercial property in the US is performing well across all sectors, according to Moody's/RCA Commercial Property Price Indices (CPPI). Prices have climbed by 28 per cent since the dark days of January 2010, indicating the country is once again emerging as the prime spot for real estate investment.
Although prices are still 21.8 per cent shy of those experienced during the 2007 December peak, the market appears to be gaining momentum. Boston and New York are two metropolitan areas which are registering stand-out rises, with 10.4 per cent and eight per cent growth recorded respectively. New York's performance is being driven by gains in Manhattan, which has enjoyed price hikes of 16.3 per cent over the last year.
Key market segments have also experienced growth, with the apartment sector recovering within 12.2 per cent of the December 2007 peak value, while core commercial is just 25.2 per cent away from this target. Central business district offices are performing particularly well in core commercial sectors, increasing values by five per cent and 19.7 per cent over the last quarter and 12 months respectively.
Now major markets are also picking up the pace, noting a rise of 8.4 per cent. Investors looking for higher yield investments are especially attracted to non-major commercial properties and look set to continue their search for acquisition opportunities into the future.
However, growth hasn't been entirely equal across the US commercial market and some areas of the country have begun to lag behind prime locations. Washington DC in particular has witnessed a slowing down of activity recently, after initially enjoying a quick recovery from 2010 lows. After the first quarter of 2011, prices levelled off.
According to CPPI analysts, this is the result of concerns about the future of US government space demand. However, following the election, confidence and stability may once again return, driving growth in the city. What's more, while relatively stagnant, Washington DC is just 5.7 per cent off its peak, compared to New York's 7.5 per cent shortfall.
- Friday 23 November 2012