NEWPORT BEACH, CA–Do you detect a pattern here? In January 2018 Green Street Advisors reported that CRE pricing as measured by the Green Street Commercial Property Price Index was essentially unchanged. In February, the index, which measures values across five major property sectors, increased by less than 1%. “Commercial property values in most sectors have been stable for some time, but the recent increase in Treasury yields is affecting borrowing rates and could cause a pullback on pricing,” Peter Rothemund, Senior Analyst at Green Street Advisors, said at the time.

In March the Green Street Commercial Property Price Index decreased by 1%. “Over the past couple of years, commercial property pricing has cooled as investors take stock of record prices, slowing fundamentals, and higher Treasury rates,” Rothemund, said about this movement. He did go on to add that the ho-hum performance in aggregate is a bit misleading. “Prices for industrial, life science, medical office, and manufactured home have been hitting new highs, while retail is down 10% from its peak.” He made a similar comment about January's numbers.

While retail may indeed be dragging down overall CRE pricing, another view of the market comes from CoStar Group, which publishes its own indices measuring price movements and its big picture take away is of a slowing market, at least for larger-sized assets. It reported that its equal-weighted US Composite Index, which reflects the more numerous but lower-priced property sales typical of secondary and tertiary markets, advanced by 1.4% in the month of February 2018 and increased 13.2% in the 12-month period ended in February 2018. By comparison, the value-weighted US Composite Index, which reflects larger-asset sales common in core markets, fell 0.5% in the month of February 2018, while posting an annual gain of just 6.2% in the 12 months ended in February 2018.