Annual commercial real estate pricing fell to a new low in December, according to the newest CRE Nowcast monthly pricing index by online commercial real estate marketplace Ten-X Commercial. Commercial pricing fell by 0.3% from November, marking the eighth consecutive month of decline and the lowest pricing-point growth in this cycle. The pricing gauge is now just 1.0% higher than it was one year ago.
“Despite positive economic news and a new tax law that should benefit CRE, investor sentiment has been quite weak, leading to a startling eighth straight month of pricing contraction for the sector,” says Peter Muoio, chief economist at Ten-X.
The Ten-X Apartment Nowcast also fell, by 0.3%, from November to December, leaving apartment pricing just 2.6% higher in December 2017 than it was in December 2016. This drop continues a six-month trend of decline that started in mid-2017. On a regional basis, only the West experienced pricing growth in December, the report notes, while national annual apartment pricing growth reached a cyclical low.
“The continued decline in December confirms that commercial real estate investors are wary going into the new year,” says Muoio. “Even segments like industrial and apartment, which seemed to have limitless potential just months ago, have seen marked pricing declines due to supply and other concerns. With pricing across all segments up just 1.0% in the past year, the question of whether pricing will pick up in 2018 or continue its sluggish performance remains to be seen.”
The Ten-X CRE Nowcast covers retail, office, apartment, industrial, and hotel pricing. It is calculated from Google Trends data, Ten-X commercial’s proprietary transaction data, and investor surveys.