NEW YORK CITY-With industry experts frequently referring to a bifurcation or trifurcation of the investment sales market over the past several months, it follows that a closer look at the Moody’s/REAL Commercial Property Price Index would reveal wide variances. The topline result of the latest CPPI, released Tuesday, shows that the index declined by 1.2% overall in January, continuing a recent trend toward modest declines. Yet some markets, notably office in New York City and Washington, DC, have shown steady gains over the past several months, while prices for distressed properties help to pull down the average.

“Choppiness in the CPPI is starting to subside” as the bottoming process that started in the fourth quarter of 2009 continues, Tad Philipp, director of commercial real estate research at Moody’s, says in a release accompanying the report for the newest index. “However, some choppiness will remain as the share of distressed transactions continues to be elevated.”

A new research section of the monthly CPPI report, titled “From the Lab,” illustrates the disparity leading to the choppiness. Overall, the CPPI shows prices down 42.8% from their October 2007 peak.

However, prices on a six-city sub-set—including New York City, Washington, Chicago, Los Angeles, San Francisco and Boston—are off only 18.9% from October ‘07. Office pricing in New York and DC has increased by 32.9% and 20.7%, respectively, over the past year. By contrast, prices on distressed properties represent a 53.9% drop from the peak.

This occurs even as the tide of distress has begun to ebb. Real Capital Analytics says outstanding distress as of January was $178.9 billion, down by $6.7 billion from its September 2010 peak.

“So far this cycle, 40% of cumulative distress has been either restructured or resolved; the balance remains a factor for overall US pricing trends,” according to RCA. As an example, Moody’s says San Francisco office prices are down 9.9% from a year ago, due partly to an elevated level of distressed trades in its suburban markets.

The effect is also more pronounced when transaction volume remains low. January’s CPPI was based on 116 repeat sales worth $1.45 billion, down from December’s levels, although the number of sales was up nearly 30% from a year ago, while the dollar volume was up about 25% year-over-year.

The past four quarters have seen big pricing gains in two property sectors in the South, with apartments increasing 53.7% and industrial up 39.4%. Florida apartment prices, in particular, saw their first year-over-year gains since 2005, increasing 33% over January 2010, according to Moody’s. The CPPI is prepared by Moody’s and Real Estate Analytics, using RCA transaction data.

Another monthly pricing index, prepared by Newport Beach, CA-based Green Street Advisors, also shows a gradual upward trend. The latest Green Street index, released earlier this month, increased by 1% in February.

Pricing has increased in value by more than one-third from the 2009 trough, says Green Street, although value are still off by 15% to 20% from their peak. “The rebound in pricing that began in earnest in the middle of ‘09 has been impressive in terms of both its vigor and durability, although recent increases in interest rates have caused momentum to slow,” Mike Kirby, Green Street’s director of research, says in a release.