CRE Price Indices Post First Positive Annual Returns Since Pandemic

Price indices for the industrial, apartment, retail and office sectors all posted positive annual returns for the first time since the pandemic began, as the Real Capital Analytics US National All-Property Index grew by 8.4% year-over-year in April.

Unsurprisingly, the industrial sector showed the largest gains and is now up 9.4% on the year, according to RCA data.  The figures are bolstered by research also released by Green Street that shows industrial rose 5% last month.

The RCA retail index grew by 1.3%, a positive sign since annual growth in the sector had been flat the month prior and weathered a calamitous 2020. 

Apartment growth also hit a 7.6% increase year-over-year in April, a decline from the nearly double-digit growth the sector posted last April.  But both the industrial and apartment sectors showed the strongest activity in April when compared to pre-pandemic trends, and US deal volume also jumped to new highs last month.

The outlier? CBD office, which showed prices sank in April 4.9% over 2020 figures. Meanwhile, the main office index increased by 3% year-over-year, owing mostly to suburban price upticks.

Green Street’s all-property index remains 5% below pre-pandemic levels, the firm said, but industrial, manufactured housing, and self-storage values are all higher than they were pre-COVID.  Meanwhile, lodging and retail values are down about 10%. 

“Pricing varies, but some property types—industrial, self-storage, and assets with high-credit tenants and long leases—are red hot right now and values are well above pre-pandemic levels,” said Peter Rothemund, managing director at Green Street, in a recent post on the topic. “Pricing of other properties has not fully recovered, but interest rates are low, and the economy is heating up. It sure looks like we’ll see more price increases.”