Industrial, apartment sectors propel commercial price growth

Real Capital Analytics’ (RCA) National All-Property Index for commercial property prices increased 7.0% year over year in January, with industrial and apartment sector prices fueling the gain.

The overall growth — which also amounted to a 0.5% month-over-month increase from December — is in line with recent increases, according to RCA.

The industrial index rose 10.7% annually and 0.6% between December and January. Industrial properties continue to show the strongest growth rate among commercial property types, although their pace has been on a steady slowdown since the middle of last year.

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Their gradual downtrend stands in contrast to prices in the multifamily segment, where prices have picked up steam since mid-2019. The apartment index saw year-to-year growth of 9.7%, second among property types, and monthly growth of 0.5%.

Another sector that has seen a recent boost to price growth is offices. Though the office segment as a whole continues to underperform the All-Property Index, the 5.6% year-over-year growth rate seen by the sector in January is nearly double the rate it saw just six months prior. Office price gains are accelerating yearly both in central business districts (up 7.0% from January 2019) and suburban areas (up 4.6%). Suburban price growth, specifically, has been on a consistent upswing since the summer. On a monthly basis, offices as a whole gained 0.8% in January.

As it has consistently done of late, retail again showed the slowest price growth in January. Retail prices grew just 2.4% year-to-year and were unchanged month-to-month. The sector’s annual growth rate is in line with recent trends, with RCA’s retail index averaging a 2.3% annual return rate for the last three years.


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