CHICAGO—The Moody's/RCA Commercial Property Price Index keeps showing steady upward movement in pricing along with downward movement in cap rates, but office properties in the nation's CBDs have led the way, and now stand roughly 42% above the pre-crisis peak, according to a new report published yesterday by Moody's Investors Service.

"With capital increasingly chasing CBD office property, particularly in major markets, CBD office prices have increased by 12.1% over the last three months, surpassing price growth in all other CPPI sectors by more than eight percentage points," says Tad Philipp, Moody's director of commercial real estate research.

Office cap rate compression has also been most notable in the major markets, many of which are now at or near their 15-year lows.

According to Moody's, industrial properties located in the major markets, which it defines as the gateway cities of Boston, Chicago, Los Angeles, New York, San Francisco and Washington, DC, is the next best-performing core commercial segment, but with prices about 11% above the pre-crisis peak, it remains a distant second to the soaring downtown office market.

The price index for properties nationwide rose by 1.3% in May, the data show, and now stands about 11.5% above the pre-crisis peak in November 2007. Moody's officials note that their data differs somewhat from that of the National Council of Real Estate Investment Fiduciaries. NCREIF data, for example, show an overall rise of just 7.1% over the pre-crisis peak.

Part of the reason was that the CPPI had recorded a deeper trough than the NCREIF. “The NCREIF series experienced a 29.3% peak-to-trough decline following the financial crisis, as compared with a 40.4% peak–to-trough decline experienced by the CPPI series,” the researchers note. “Many of the CPPI observations come from transactions among private market owners involving middle market property” and “the sharp contraction in commercial mortgage credit following the crisis likely accounts for the CPPI's deeper trough.”

Apartment prices climbed by 1.3% in May, exceeding their pre-crisis peak by 29.5%, according to Moody's. Core commercial prices, which include the industrial, CBD office, suburban office and retail sectors, increased by 1.2%, putting them 5.4% above peak.

But the difference between major markets and the rest of the nation remains quite significant. For major markets, prices exceed the November 2007 pre-crisis peak level by about 27.4%, while non-major market prices are still roughly 1% below peak.