All Major Property Types Post Annual Declines
The RCA CPPI indicates CRE’s most widespread downturn since 2010.
It’s been a dozen years since all the major property types posted annual declines in a single month (April), marking the first time since September 2010 that widespread negativity prevailed, according to the RCA CPPI National All-Property Index.
Even the industrial sector slipped when it experienced both monthly (0.5%) and annual (0.85) price drops.
GlobeSt.com this week reported that industrial, still exhibiting strength, is potentially facing problems from corporate debt maturing into unfavorable financing conditions and rising vacancies from new inventory coming out of construction.
The RCA CPPI index as a whole sank 1.1% relative to March and dropped 9.4% from April of 2022.
Marcus & Millichap recently reported that commercial real estate has experienced widespread softening, but not evenly. Office, in particular, has been under the microscope since the pandemic.
“While there has been some softening in many of the commercial real estate property types and markets, not everything is being affected the same way, according to Marcus & Millichap.
As measured by RCA, the apartment and retail sector prices lately were much to blame. The apartment sector again saw the largest monthly and annual declines among the major property types.
Prices for retail properties dropped 6% from a year ago and 0.5% since March, its worst year-over-year performance since the end of 2010.
Retail’s reversal is stunning. A year ago, its index posted an annual increase of greater than 18%.
Meanwhile, declines in suburban office prices have sharpened faster than in CBD areas. The suburban office index was down 6.3%, while the CBD office index fell 3.8%.
As recently as January of this year price growth for suburban offices was outperforming that of CBD offices.
“The spread between annual price declines in the six Major Metros and Non-Major Metros narrowed in April,” according to the report.
“The major metro index fell 9.8% YOY compared to an 8.3% fall in the non-major metros. Annual price growth in secondary markets was outpacing that in the major metros by more than 10% less than one year ago.”