U.S. commercial real estate (CRE) prices recorded a 6.3% increase in May, according to new data released by the Moody's/REAL Commercial Property Price Index (CPPI). This is the first positive move in the CPPI in six months and the largest one-month increase since the inception of the CPPI in 2000.
Moody's attributes much of the turnaround to an increase in prices of distressed transactions, which rose 4.8% during May. May's total count of repeat transactions was 174, which was consistent with the volume of transactions during April. However, transaction volume by dollar balance increased over April by an impressive 33.8% to $3.3 billion – one of the largest non-year-end levels since the peak.
‘A number of transactions that were recorded in May had their most recent prior sales in 2009 as the market was beginning to bottom and subsequently traded for substantial returns,’ says Tad Philipp, Moody's director of CRE research. ‘We are likely to see a pickup in post-peak repeat sales and expect such transactions to play an important role in helping drive the CPPI higher.’
