Zero Hedge

The Moody's/REAL Commercial Property Price Index posted a 5.5% decline from December, representing the largest drop in its history. Price are now down 19.1% from a year ago and 15.4% lower than two years ago.

New York, March 19, 2009 -- Commercial real estate prices as measured by Moody's/REAL Commercial Property Price Indices (CPPI) decreased in January by 5.5% from the previous month. The January decline was the largest in the history of the index, which has followed commercial real estate prices since December 2000.
Prices are now down 19.1% from a year ago and 15.4% lower than they were two years ago. They have declined 21.0% from their peak in October 2007. Prices have nominally returned to the levels they were in the spring of 2005, says Moody's.

Transaction volumes in January were at their lowest levels since October 2003. Moody's expects volumes to decline further during 2009.

Looking at regional yearly performance in 2008, Moody's notes variations among the different commercial real estate sectors.

In the East, apartment prices saw the greatest decline, with a drop in prices of 13.7% in 2008, although the three additional property types -- offices, retail, and industrial, also saw significant declines.

In Florida, apartment prices fell for the third straight year, posting a 7.3% decline in 2008.
In the South, the industrial sector recorded the weakest yearly performance, with industrial prices declining 15.5%.

In Southern California, three of the four sectors saw double-digit declines in 2008. The best performing sector in Southern California was retail, which posted a decline of 8.0%.
Of the three major office markets, New York fared the best in 2008, with a decline in value of 7.5%.

The CPPI

Moody's/REAL Commercial Property Prices Indices are based on the repeat sales of the same properties across the US at different points in time. Analyzing price changes measured in this way provides maximum transparency and methodological rigor. This approach also circumvents the distortions that can occur with other commercial property value measurements such as appraisals or average prices, says Moody's.

The title of this report is "Moody's/REAL Commercial Property Price Indices, March 2009."