Prices for commercial real estate assets slid from September to October, according to the newest Commercial Property Price Index (CPPI) report from MSCI Real Assets.
The company’s CPPI National All-Property Price Index was up 7.3% year over year in October but down 0.4% on a monthly basis. On an annualized basis, October’s negative price growth equates to a 4.5% decline.
Most property types saw prices down from September. Year-over-year growth rates slowed in every subsector as capital costs have increased and deal activity has waned. October saw sales volume plunge by a double-digit percentage compared to October 2021, marking three consecutive months of substantial yearly declines.
Asset classes that showed commendable buoyancy through the doldrums of the COVID-19 pandemic are now showing some cracks. The industrial sector logged the best performance with prices up 0.7% month over month and 16.9% year over year, but October was the seventh straight month that the property type’s annual growth rate slowed. Multifamily prices were up 11.3% from October 2021, but down 0.6% from September. Over a full year, this equates to a 7% drop.
Retail asset prices, which had reached a record rate of annualized price growth earlier in 2022, saw their yearly gains retreat to 8.2% along with a monthly decline of 0.3%. Office prices fell back 0.1% from September, with the drop driven chiefly by a 0.3% slide in central business district (CBD) office values. The CBD office index also was weak on a yearly basis with a gain of only 1.9%, the smallest across all asset classes measured by MSCI.