More signs are emerging that the commercial real estate market has bottomed out or at least is close to it. Some of these include the opportunistic debt vehicles are forming with an eye on bargain acquisitions and indications that the bid-ask gap is beginning to narrow. Even BlackRock has declared that now is the time to invest in CRE after last year’s tight credit conditions forced pricing adjustments.
The latest and perhaps more decisive signal, though, comes from Green Street, which reports that its commercial property price index increased 0.3% in January.
The all-property index—a measure of pricing for institutional-quality commercial real estate—is 21% below its March ’22 peak.
“For most property types, pricing has probably hit its low,” said Peter Rothemund, Co-Head of Strategic Research at Green Street. “Office is an exception to that. Values in the office sector are expected to continue to decline.”