NEW YORK CITY-The Moody’s/REAL All Property Type Aggregate Indexhit a new low in August, the ratings agency said Tuesday. With a3.3% decrease to 105.37 from the month before, it surpasses theprevious low mark of 107.98 set in October 2009, and prices haveeffectively returned to early 2002 levels.

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“The data suggest that the commercial real estate market hasbecome trifurcated, with prices for larger trophy assets rising,prices for distressed assets declining sharply and prices forsmaller but healthy properties remaining essentially flat,” writessenior analyst Nick Levidy in the report. He adds that one way toview index returns is by looking at the interplay of these threecomponents within the overall market. “The index again turnednegative this month in part because large negative returns ondistressed properties created a drag that outweighed the positiveand flat results of the performing properties.”

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In December 2000, when Moody’s and Real Estate Analytics beganthe Commercial Property Price Indices, the Consumer Price Index waspegged at 100. From the start of the decade through the beginningof the economic downturn, commercial real estate prices grew at amuch faster rate than inflation, writes Levidy. That changed abouta year ago.

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“In June 2009, as the recession gained steam, commercial realestate prices fell below the CPI and have not yet rebounded to thatlevel,” he writes. If commercial real estate prices had tracked therate of inflation since December 2000, the CPPI would now be 19%higher. Over time, “we expect the CPPI to revert to a long-termtrend line close to that of the CPI,” adds Levidy.

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The report, which REAL prepares using data from Real CapitalAnalytics, notes that the number of repeat sales in August wasclose to the number of repeat sales in July. At the same time, thedollar amount was slightly higher in August, totaling $1.85billion, compared to $1.35 billion in July.

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“However, the number of repeat sales remains significantly belowthe peak,” Levidy writes. “When sales volume begins to rise some ofthe recent choppiness in the index will begin to subside.”

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.