Commercial asset prices see largest ever year-over-year jump in October

With investors clamoring for opportunities and plenty of capital to be had, the prices of U.S. commercial real estate saw their largest ever year-over-year jump in October, according to Real Capital Analytics’ (RCA) latest Commercial Property Price Indices (CPPI) report.

Prices jumped 15.9% year over year in October, the fastest annual pace in the history of the CPPI. Month over month, the CPPI is up 1.7%. Through October, investors bought $523.8 billion in commercial property assets, up 70% from the 10-month period opening last year.

The same sectors that have showed strength throughout the pandemic were at the forefront of year-to-date spending. For example, more than $200 billion were spent by investors in acquiring multifamily properties through October — almost double the amount spent through the same month last year. Another $100 billion-plus was spent on industrial properties.

Not surprisingly, the two sectors lead all other commercial segments in year-over-year price growth, with industrial assets up 18.9% and apartments up 16.8% annually. The apartment index’s yearly gain is the largest ever recorded by RCA in the sector. Price growth for the two asset classes is also strong in the short term, with industrial up 1.9% month over month and apartments up 1.4% over the same timeframe.

But other sectors are flexing some pricing muscle of late, too. RCA’s office index was up 13.7% year over year in October, marking four consecutive months of annual growth in double-digit percentage territory. The jumps in office prices have been spearheaded by suburban office properties, which saw a climb of 15.6% from October 2020; central business district offices, while still lagging, were at 0.9% yearly in October, showing progress from the negative growth the subsector saw in most of 2021.

Retail, too, is continuing to improve, with October’s 14.2% year-to-year gain marking the segment’s third consecutive double-digit price increase. That annual growth rate is the retail market’s highest since before the Global Financial Crisis, RCA noted.


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