NEWPORT BEACH, CA—The latest reports from Green Street Advisors and Real Capital Analytics suggest that a slowdown  is in the offing for both sales volume and price appreciation.  Green Street said Friday that its Commercial Property Price Index increased by 1% in August, reflecting a slower pace of appreciation than we saw earlier in the year. RCA said late last month that the Moody's/RCA CPPI National All Types aggregate climbed at a slightly faster pace in the second quarter, increasing 3.6% during the three-month period; however, year-over-year sales volume was down 14% on a year-over-year basis for July.

The modest 1% increase in Green Street's CPPI for August followed two months of essentially flat growth in pricing, which in turn followed a 3% rise in May. “Cap rates appear to have leveled out over the past few months,” says Peter Rothemund, senior analyst at Newport Beach, CA-based Green Street. “And given the current state of capital markets it doesn't look like they'll move any lower. Real estate is looking increasingly expensive versus corporate bond yields, which have been on the move higher. Additionally, pricing in the market for publicly traded REIT stocks suggests investors there share the view that property values are stretched.”

Similarly, New York City-based RCA says in its latest US Capital Trends Big Picture report that the July slowdown, to $31.6 billion in sales of significant commercial properties during the month, follows slowing growth in volume in recent periods and a number of months of declines for certain commercial property sectors.

“The slowdown into July may be a sign of buyer resistance to higher prices,” according to RCA. “Cap rates are at or below historic lows for most property sectors. This statement is not meant to say that prices are too high, but rather that the urgency in the last few years to buy now as cap rates were falling is simply cooling.”

That being said, RCA says it's possible to read too much into the recent slowdown. “One can take the wrong message away from the recent slide in investment activity if one focuses on the recent turmoil in the financial markets,” marked by China's devaluation of the yuan and a 30-basis point decline in 10-year Treasury yields over the course of two-and-a-half weeks. “The impact of that turmoil is yet to be felt on commercial property and the recent slide is driven by other forces.”

If anything, RCA says, “the financial market turmoil may generate more activity for core properties into the fall. Investors are, after all, signaling a move to a risk-off pattern again,” amid falling yields on the 10-year Treasury.

As a closing thought, RCA suggests that “the slowdown to decline may also be a function of activity taking a breather into summer. Deal volume came in at a hectic pace early in 2015 and, despite July, the market is still 29% ahead of 2014 volume by this point.” Market watchers will have a better idea of where things stand, RCA says, when everyone reverts to their normal post-Labor Day schedules.