Commercial Cataclysm!: Moody’s/REAL Commercial Property Price Index December 2009

The latest release of the Moody’s/REAL Commercial Property Index while showing a whopping 4.1% increase in prices since November, the second consecutive gain in fifteen months and the largest monthly gain on record, still continues to suggest that the nation’s commercial property markets are experiencing a tremendous downturn with prices declining 29.22% on a year-over-year basis and a stunning 40.8% since the peak set in October 2007.

The Moody’s/REAL CPPI data series is produced by the MIT/CRE but is noted to be “complimentary” to their alternative transaction based index (TBI) as it is published monthly and is formulated from a completely different dataset supplied by Real Capital Analytics, Inc and Real Estate Analytics LLC.

Commercial Cataclysm!: Moody’s/REAL Commercial Property Price Index September 2009

The most recent results of the Moody’s/REAL Commercial Property Index continues to suggest that the nation’s commercial real estate markets are now firmly experiencing a tremendous downturn with prices plummeting a whopping 36.98% on a year-over-year basis and a stunning 42.70% since the peak set in October 2007.

The Moody’s/REAL CPPI data series is produced by the MIT/CRE but is noted to be “complimentary” to their alternative transaction based index (TBI) as it is published monthly and is formulated from a completely different dataset supplied by Real Capital Analytics, Inc.

Commercial Cataclysm!: Moody’s/REAL Commercial Property Price Index August 2009

The most recent results of the Moody’s/REAL Commercial Property Index continues to suggest that the nation’s commercial real estate markets are now firmly experiencing a tremendous downturn with prices plummeting a whopping 32.80% on a year-over-year basis and a stunning 40.62% since the peak set in October 2007.

The Moody’s/REAL CPPI data series is produced by the MIT/CRE but is noted to be “complimentary” to their alternative transaction based index (TBI) as it is published monthly and is formulated from a completely different dataset supplied by Real Capital Analytics, Inc.

Commercial Cataclysm!: Moody’s/REAL Commercial Property Price Index July 2009

Today's results of the Moody’s/REAL Commercial Property Index continues to suggest that the nation’s commercial real estate markets are now firmly experiencing a tremendous downturn with prices plummeting a whopping 30.83% on a year-over-year basis and a stunning 38.54% since the peak set in October 2007.

The Moody’s/REAL CPPI data series is produced by the MIT/CRE but is noted to be “complimentary” to their alternative transaction based index (TBI) as it is published monthly and is formulated from a completely different dataset supplied by Real Capital Analytics, Inc.

Commercial Cataclysm?: Moody’s/REAL Commercial Property Price Index June 2009

Today's results of the Moody’s/REAL Commercial Property Index continues to suggest that the nation’s commercial real estate markets are now firmly experiencing a tremendous downturn with prices plummeting a whopping 26.85% on a year-over-year basis and a stunning 35.41% since the peak set in October 2007.

The Moody’s/REAL CPPI data series is produced by the MIT/CRE but is noted to be “complimentary” to their alternative transaction based index (TBI) as it is published monthly and is formulated from a completely different dataset supplied by Real Capital Analytics, Inc.

Commercial Cataclysm?: Moody’s/REAL Commercial Property Price Index February 2009

The latest results of the Moody’s/REAL Commercial Property Index strongly suggests that the nation’s commercial real estate markets are now firmly experiencing a tremendous downturn with prices plummeting a whopping 21.24% on a year-over-year basis and a stunning 21.49% since the peak set in October 2007.

The Moody’s/REAL CPPI data series is produced by the MIT/CRE but is noted to be “complimentary” to their alternative transaction based index (TBI) as it is published monthly and is formulated from a completely different dataset supplied by Real Capital Analytics, Inc.

Commercial Calamity? S&P/GRA Commercial Real Estate Index August 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 all components with three of the four now showing annual declines resulting in the first year-over-year decline to the total index on record.

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).

Commercial Catastrophe?: MIT/CRE Commercial Property Index Q3 2008

It’s now clearly obvious that the commercial real estate (CRE) markets have inevitably followed the lead of the residential markets down into a recessionary decline.

The notion of commercial real estate markets suffering a similar downturn as residential is both supported by historical correlations (e.g. residential and non-residential investment) as well as the logical outcome for a market that has seen similar levels of loose over-lending.

Fortunately, we need not speculate about the current state of CRE as the MIT Center for Real Estate tracks commercial property prices with a series of indexes that cover Apartment, Office, Industrial and Retail property types.


Notice that the top aggregate chart, after showing some substantial growth between 2003 and Q2 2007 (particularly during 2005 and 2006), clearly indicates that a significant pullback has formed from the second half of 2007 onward leaving prices now 11.69% below the high seen in Q2 2007.

Furthermore, in Q3 2008 the Industrial and Retail components continue to show significant peak declines of 15.75% and 8.85% respectively while the Office component declined by 9.28% from its peak set during 2007.

Looking at the supply and demand indices of the Retail component appears to shed some light on the factors now working to drive prices lower for that market.

Notice that supply of retail properties has remained high in recent quarters, while demand has continued to remain substantially below levels seen just last year.

Commercial Cataclysm?: Moody’s/REAL Commercial Property Price Index August 2008

Today I’m adding yet another commercial property price index to the list of recurring posts that track the commercial real estate market.

The Moody’s/REAL CPPI data series is produced by the MIT/CRE but is noted to be “complimentary” to their alternative transaction based index (TBI) as it is published monthly and is formulated from a completely different dataset supplied by Real Capital Analytics, Inc.

The latest results reflecting national data for all property types settled through August strongly suggest that prices for commercial real estate have eroded significantly.

Taken together, the MIT/CRE Commercial Property Index, S&P/GRA Commercial Real Estate Index and the Moody’s/REAL CPPI all appear to be firmly indicating that the nation’s commercial real estate markets are experiencing a significant decline.

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

Like the MIT/CRE Property Index, Standard & Poor’s also tracks commercial real estate (CRE) prices for various commercial property types.

The July results reveal a marked slowing of price appreciation across all classes of commercial real estate with the aggregate index registering its first annual decline in at least the 15 years the data has been tracked.

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).

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

Like the MIT/CRE Property Index, Standard & Poor’s also tracks commercial real estate (CRE) prices for various commercial property types.

The recent results reveal a marked slowing of price appreciation across all classes of commercial real estate with the retail component even declining on a year-over-year basis.

It’s important to note that the June results reflect an environment for commercial real estate that is comparable to the period that followed the dot-com collapse.

This appears to indicate that a more prolonged market downturn will be seen this time around with a more pronounced period of depreciation.

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

Comparing the MIT/CRE and S&P/GRA indices, it’s apparent that during economic slowdowns the GRA index tends to flatten out while the MIT indices indicate outright decline.

For example, the MIT/CRE appears to have captured a contraction in commercial properties that occurred following the “dot-com” bust while the S&P/GRA never showed declines on a year-over-year basis… only a steep decline in appreciation and several months of flattening.

For now, it’s important to reflect on both reports until there is more clarity on the state of the commercial property markets.

Commercial Catastrophe?: MIT/CRE Commercial Property Index Q2 2008

There has been growing speculation and concern that the commercial real estate (CRE) markets will inevitably follow the lead of the residential markets down into a recessionary decline.

The notion of commercial real estate markets suffering a similar downturn as residential is both supported by historical correlations (e.g. residential and non-residential investment) as well as the logical outcome for a market that has seen similar levels of loose over-lending.

Fortunately, we need not speculate about the current state of CRE as the MIT Center for Real Estate tracks commercial property prices with a series of indexes that cover Apartment, Office, Industrial and Retail property types.


Notice in the top aggregate chart, after having some substantial growth between 2003 and Q2 2007 (particularly during 2005 – 2006), there appears to be a pullback of sorts that started to form during the second half of 2007 leaving prices now 9.25% below the high seen in Q2 2007.

Furthermore, in Q2 2008 the Industrial and Retail components continue to show significant peak declines of 14.90% and 6.87% respectively while the Office component grew by 5.51% on a year-over-year basis.

Looking at the supply and demand indices of the Retail component appears to shed some light on the factors now working to drive prices lower for that market.

Notice that while supply of retail properties have increased substantially in recent years, demand while remaining largely flat since 2005 has now started to decline precipitously.

It will likely take another 2-3 quarters to get a firm picture of what exactly is occurring in the nation’s commercial real estate market but the latest MIT/CRE seems to be suggesting further weakness ahead.

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

Like the MIT/CRE Property Index, Standard & Poor’s also tracks commercial real estate (CRE) prices for various commercial property types.

Although recent results have revealed some slowing of price appreciation across all classes of commercial real estate, March’s results again show a continuation of price growth.

All components experienced growth both on a year-over-year basis with the retail and warehouse components gaining as compared to the prior monthly result.

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

Comparing the MIT/CRE and S&P/GRA indices, it’s apparent that during economic slowdowns the GRA index tends to flatten out while the MIT indices outright decline.

For example, the MIT/CRE appears to have captured a contraction in commercial properties that occurred following the “dot-com” bust while the S&P/GRA never showed declines on a year-over-year basis… only a steep decline in appreciation and several months of flattening.

For now, it’s important to reflect on both reports until there is more clarity on the state of the commercial property markets.

The Almost Daily 2¢ - Turn Em’ In NOW!

By now everyone should be well aware of the fact that the FBI is putting some serious teeth behind their national campaign to investigate corruption and fraud in the financial, mortgage and real estate industries.

In just a little over three months "Operation Malicious Mortgage Fraud”, implemented by FBI officials of 46 of the 56 regional field offices, has netted over 400 of the worst offenders ranging from Bear Sterns hedge fund managers to “run of the mill” real estate agents and mortgage brokers.

Better yet, there have already been 173 convictions!

Given the effectiveness of this campaign, I think now would be just about the right time to turn in any and all information you may have on mortgage and real estate fraud.

If you feel that you or a member of your family, friends or other associates have been financially injured by some dealing with the mortgage and real estate industry, I strongly URGE you to follow the links below and report all you know as well as pass this post or the information contained in this post to those that you feel may have been defrauded.

The FBI provides an online facility for reporting “Tips and Public Leads” as well as hosts call lines at each of the regional field offices where you can speak at length with an investigator.

As a victim of identity theft some years back, I can assure you that the FBI investigators of your regional field office will be both welcoming and responsive.

The window is now wide open for you to easily report your case of mortgage or real estate fraud so don’t let this opportunity pass.

Now is the time to make the brazen and fraudulent profiteers of these corrupt industries and era pay for all of their wrongdoings.

Click here for the Online “Tips and Public Leads” form.

Click here to find the contact information of your regional FBI field office.

Commercial Calamity? S&P/GRA Commercial Real Estate Index December 2007

Like the MIT/CRE Property Index, Standard & Poor’s also tracks commercial real estate (CRE) prices for various commercial property types.

Although recent results have revealed some slowing across all classes of commercial real estate, December’s results show a continuation of price growth.

All components experienced growth both on a year-over-year basis and as compared to the prior monthly result with the greatest gains seen in office properties.

The charts below show the National index and the component indices since 1993 (click for larger).

This report will be particularly important to monitor over the next few months as continued growth and stability would surely quell much concern over potential spillover effects of the recession and credit crunch on to commercial real estate.

Commercial Calamity? S&P/GRA Commercial Real Estate Index November 2007

Like the MIT/CRE Property Index, Standard & Poor’s also tracks commercial real estate (CRE) prices for various commercial property types.

Today’s results, including data gathered up to November 2007, further confirms the recent slowdown seen in the commercial real estate markets with the National composite index declining 1.36% since the peak set in August 2007.

Most components experienced weakness as compared to respective peaks set between July and August 2007 with the Office component showing a 5.24% peak decline, the Retail component showing a 2.01% peak decline, the Warehouse component showing a 1.57% peak decline and the Apartment component showing an increase of 2.44% as compared to November 2006.

The charts below show the National index and the component indices since 1993 (click for larger).

Notice that growth of the National index has slowed measurably since the peak annual appreciation rates seen at the end of 2005.

At the rate of deceleration seen over the last 2.5 years, it’s possible that CRE could begin to show negative year-over-year growth in the next 6 to 9 months.

Commercial Catastrophe?: MIT/CRE Commercial Property Index Q3 2007

There has been growing speculation that the commercial real estate (CRE) markets will inevitably follow the lead of the residential markets down to a recessionary correction.

For an excellent background and thorough analysis read CalculatedRisk’s posts from earlier this year and more recently Professor Nouriel Roubini’s post from yesterday.

The notion of commercial real estate markets suffering a similar downturn as residential is both supported by historical correlations (e.g. residential and non-residential investment) as well as seeming to be an anecdotally logical outcome for a market that has seen similar levels of loose over-lending.

Fortunately, we need not speculate about the current state of CRE as the MIT Center for Real Estate tracks commercial property prices with a series of indexes that cover Apartment, Office, Industrial and Retail property types.


Notice in the top aggregate chart, after having some substantial growth between 2003 and Q2 2007 (particularly during 2005 – 2006), there has been a precipitous 2.5% drop in Q3 2007, a drop that MIT/CRE Director David Geltner sees as non-trivial.

"The fall in our index is the first solid, quantitative evidence that the subprime mortgage debacle, which hit the broader capital markets in August, may be spreading to the commercial property markets."

Also, as you can see that not all components experienced such tremendous upward movement during 2005 and 2006 particularly Apartment and Retail, the two property types most directly exposed to the consumer.

In future posts, I’ll elaborate on the correlation between residential and non-residential fixed investment and add additional charts using MIT’s CRE supply and demand index data as well as the Moodys/REAL CPPI also produced by MIT/CRE.