Price Indices Register 'Shocking' Quarterly Drop

NEW YORK CITY-The Moody’s/REAL National All Property Type Aggregate Index for March, released in late May, measures 148.07, with a quarterly drop in office prices that Real Estate Analytics president Neal Elkin terms “shocking.” The index’s monthly decrease was 1.7%, and the index showed a year-over-year decline of 20.8% from March 2008.

“The national office market was down 18.6%” in Q1 2009 compared to Q4 ’08, Elkin tells GlobeSt.com. “That was well beyond what you’d expect in one quarter. Maybe we’re insulated from that somewhat here in New York, but I personally underestimated how poorly the secondary and tertiary markets are doing, particularly in the office space.”

He adds, “Comparing these national and top 10 office returns over the past quarter and the past year, that’s shocking. If the top 10 markets are down 6.8% and nationally it’s down 18.6%, that means the secondary and tertiary markets are down close to 30%. That’s an enormous drop in price over one quarter.”