While insurance rates typically increase gradually over time, new research from Moody's suggests that premium hikes over the past six years have become increasingly challenging—and even prohibitive—for commercial real estate investors.
From 2017 to 2023, insurance costs surged across all asset types. But some markets, particularly those in the Sun Belt, saw insurance costs grow by more than 20%, far outpacing the national average growth of commercial real estate properties of 9.7% over the same period.
Moody's analysis revealed the following national averages for compounded annual growth rates (CAGR) of insurance expenses:
- Multifamily: 13.3%
- Office: 7.3%
- Retail: 7.8%
- Industrial: 9.7%
- Hotel: 10.3%
"There is a wide distribution of insurance cost growth around the national average," Moody's noted. "Among all properties we examined, the majority experienced insurance cost CAGRs above 10% from 2017 through 2023. Additionally, most properties across each asset type saw insurance premium CAGRs over 5% during the last six years."
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
