Wednesday, October 29, 2008

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).