Prices of All Major US Property Types Fell in April
All major U.S. commercial-property types posted annual price declines in April, marking the first time since September 2010 that prices fell across the board. The industrial index had held out until April, when it experienced both monthly and annual price drops.
Industrial prices slipped by 0.5% on the month and fell 0.8% versus a year earlier. The RCA CPPI National All-Property Index fell 1.1% relative to March and dropped 9.4% from April of 2022, dragged down by the slide in apartment prices.
Apartment weakness
The apartment market again saw the largest monthly and annual declines among the major property types. Rising mortgage rates have led to a sharp decline in prices, with the index falling 12.1% from a year prior and 1.5% from March. The monthly rate of decline has slowed, however. The index had posted monthly drops of greater than 2% between November of 2022 and February of this year.
Prices for retail properties dropped 6.0% from a year ago, the largest annual decline the property type has experienced since the end of 2010. This time last year the retail index posted an annual increase of greater than 18%. For the office market, prices fell 6.9% relative to April 2022, a sharpening of the drop seen in recent months.
Prices dropped across the board
Source: RCA CPPI (commercial-property price indexes)
The Pool of US Commercial-Property Lenders Shrank (Again)
The acquisition of First Republic Bank by JPMorgan Chase & Co. will lead to the consolidation of two of the top 25 commercial-real-estate lenders in the U.S., which may further complicate asset pricing due to changing competition to fill the debt portion of the capital stack.
2023 Trends to Watch in Real Assets
Five critical insights to help you navigate challenges ahead
Commercial-Property Debt Not Just a Small Bank Story
Recent industry chatter suggests that smaller banks are behind 70% of all commercial-real-estate lending in the U.S.
The content of this page is for informational purposes only and is intended for institutional professionals with the analytical resources and tools necessary to interpret any performance information. Nothing herein is intended to recommend any product, tool or service. For all references to laws, rules or regulations, please note that the information is provided “as is” and does not constitute legal advice or any binding interpretation. Any approach to comply with regulatory or policy initiatives should be discussed with your own legal counsel and/or the relevant competent authority, as needed.