Commercial Calamity? S&P/GRA Commercial Real Estate Index September 2008

Standard & Poor’s tracks commercial real estate (CRE) prices for various commercial property types.

Today’s results indicate that the commercial real estate decline has firmly arrived and it is notable with a marked decline for most components with three of the four now showing annual declines resulting in the third consecutive year-over-year decline to the total index, marking the first such decline in the indexes history.

It’s important to keep in mind that this decline is coming from data that was settled well in advance of the historic stock market and wider macroeconomic crisis which, in all likeliness, will result in significant additional downward pressure on commercial real estate prices.

Clearly, commercial real estate, having already matched and surpassed the level of decline seen after the dot-com bust, now sit poised on the verge of an unprecedented slump.

The charts below show the National index and the component indices since 1994 (click for larger).

NOTE: S&P has advertised that this particular index will now be discontinued… I’m following up with a phone call and will update this post with details.

In future months I’ll continue to post the MIT/CRE and Moody’s commercial property indices in order to get a sense of CRE market pricing conditions.