NEW YORK, Dec. 23 /PRNewswire/ -- Standard & Poor's today announced the September results for the S&P/GRA Commercial Real Estate Indices. Nationally, commercial real estate prices were down 0.6% versus September 2007, the second annual decline in the index's almost 15 year history.
The indices measure the change in commercial real estate prices by property sector and geographic region in the United States. The S&P/GRA Commercial Real Estate Indices comprise ten commercial real estate indices: a national composite, five geographic regions, and four national property sectors.
The National composite reported an annual price change of -0.6%, versus September of 2007. This is up from the -1.6% return in August's data. It is, however, well below the latest high of +14.7%, reported in August of 2006, and is the second lowest growth rate in the near 15-year history of the index.
The National composite was up slightly in September versus August, returning +0.1%. Two of the regions reported positive monthly returns while three reported a decline. The Desert Mountain West performed the best during the September/August period, returning +1.8%. With this increase, the Desert Mountain West reversed its string of six consecutive negative annual returns, returning +1.2% for the 1-year period. The worst performing region in the September/August period was the Mid Atlantic South, down 1.1%. As of September, the Pacific West was the only region with an annual decline, returning -4.1% on a year-over-year basis.
In the property sectors, three sectors reported negative returns over the September/August period, while one sector reported a positive return. Apartments were the best performing sector and Office was the worst performing, returning +1.6% and -1.3% for the month, respectively. Apartments were the only property sector that reported positive returns on a year-over-year basis, returning +1.7%. Warehouse, down 3.3%, was the worst performing sector over the one year period. Apartments were also the only sector to see a marginal improvement in their monthly returns compared to the August/July period.
"For the second straight month, and the second time in the history of the index, the National Composite recorded a negative annual growth rate, but there are some potential signs of improvement in commercial real estate prices," says David Blitzer, Managing Director and Chairman of the Index Committee at Standard & Poor's. "In the Property sector, three of the four sectors had negative returns for the month and year-over-year period. Office recorded its lowest annual return in its history (-3.1%) and was the worst performing sector in the September/August period (-1.3%). On the positive side, Apartments recorded positive returns for the 1 month and 12 month period, returning +1.6% and +1.7% respectively. The geographic regions reported mixed results. The Pacific West had the highest return for the month +1.1%, but is the only region that is in negative territory over the one year period returning -4.1%. On the other hand, the two best returning regions for the 12 month period, the Midwest and the Mid Atlantic South, were the worst performing sectors for the month. Overall, the data are not pointing to one clear direction in commercial real estate prices. We cannot tell if this is just a temporary pause in the decline of commercial real estate prices or have we reached the bottom and a turnaround is eminent."
To be eligible for inclusion, property sales must be identified as closed transactions in the defined commercial real estate regions and sectors. Closed commercial transactions are those where the escrow has closed and the title has been transferred to the new owner. There are no transactions included in the index that are appraisals, just listed, sales pending, or in escrow.
The indices are maintained and published under agreements between Standard & Poor's and GRA/Charles Schwab Investment Management (CSIM).
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SOURCE Standard & Poor's
