U.S. Commercial Property Prices Hit New Cycle Low

The leading property index:MIT Center for Real Estate (MIT/CRE) has released information showing that the US  commercial real estate prices fell 4.9 percent in the fourth quarter, setting a new low for the current downturn.

MIT/CRE publishes not only the price index based on closed deals, but also compiles indexes that separately gauge movements on the demand side and the supply side of the institutional property market.

The demand-side index tracks the changes in prices that potential buyers are willing to pay. That index fell for eight continuous quarters from mid-2007 to mid-2009, to 48 percent below its peak of 253.87. It rebounded 12 percent in the third quarter. But succumbed to the negative side in the fourth quarter, down 4.5 percent to 44 percent below its peak.

According to Reuters interview with Holly Horrigan, MIT/CRE research technician, she states “There remains a gap in pricing perception between the two sides of the market, which is keeping trading volume low by historical standards”.