Rothemund says property pricing looks attractive relative to bond yields.

NEWPORT BEACH, CA—Green Street Advisors said Thursday its Green Street Commercial Property Price Index increased by 2% in May, in contrast to the more lackluster price appreciation seen earlier this year. Values are now up 4% year-to-date, 5% year over year and 10% since the August 2007 peak, according to Green Street data.

“Property appreciation is starting to pick up. Cap rates, which had been unchanged for several quarters, have recently begun to move lower,” says Peter Rothemund, an analyst at Green Street. “It’s likely the trend continues. Real estate pricing currently looks attractive relative to bond yields.”

In contrast, Rothemund said in February that although that property values were moving higher, “it’s slow going. Over the past half a year they’ve ticked up a percent and a half—rather pedestrian compared with the robust gains” seen in 2011 and 2012.

Rothemund added in February that as long as interest rates stay near current levels, “we’re probably in for more of the same; it’s likely that property pricing continues on its current course.” Two months later, Green Street reported that the CPPI for March was unchanged.

Green Street’s CPPI measures private-market value for REIT portfolios across five major property sectors: multifamily, industrial, mall, office and strip retail. A broader measure of commercial property price movement is the Moody’s/RCA Commercial Property Price Indices, most recently issued in mid-May for the month of March. At that time, the national all-property composite index decreased 0.1% in March. The apartment component increased 0.3%, while the larger core commercial component decreased 0.3%.

“Core commercial prices have appreciated more than apartment prices over the past year,” Tad Philipp, Moody’s director of commercial real estate research, said last month. Y-O-Y, core commercial prices increased 16.3% compared with an increase of 11.6% in apartment prices. “Core commercial prices have also outpaced apartment prices over the last three-month period, by half a percentage point,” Philipp added. The CPPI as of March stood 57.4% above its January 2010 trough and 6.3% below its November 2007 peak. Moody’s also reported that apartment prices are 7.8% above their pre-financial crisis peak, while core commercial property prices are 11.1% below peak.