IRVINE, CA—Commercial property valuations have appreciated at the slowest pace in two years, according to Ten-X. In its latest Ten-X Commercial Real Estate Nowcast, the online real estate marketplace and GlobeSt.com Thought Leader says valuations across the five major commercial real estate sectors increased 19 basis points in January from the previous month, a sluggish pace not seen since early 2014.

"The first reading on commercial property markets in 2016 shows property values increasing, but still at a slower pace as the previously divergent growth rates of the different property segments continue to converge," says Peter Muoio, Ten-X's chief economist. That shouldn't be taken to mean that the results were uniform across the board, though: Ten-X notes that valuations increased in three sectors and declined in two.

In the Nowcast pricing index, which combines Google Trends data, Ten-X's proprietary transaction database and investor surveys, retail valuations increased 58 bps for January, while apartment rose 39 bps. The biggest leap ahead was seen in industrial, which followed up an outstanding December with a further 215-bp increase this month.

"Of particular interest this month is the increased valuation in retail properties in light of the fact that e-retail now accounts for a larger portion of consumer spending," Muoio says. "We'll continue to watch this sector closely to see if retail's value gains are being driven primarily by capital flows and sentiment, which could mean that this sector is at risk of weaker readings in the future."

Conversely, office valuations dropped 65 bps from December levels, and hotels continued a downward trend, losing 122 bps of value in January following similar results in November and December. Investors may be worried about an economic slowdown filtering through to the office segment, judging by negative Google search trends on the sector, Muoio points out.

If price appreciation is gaining, albeit slowly, then returns on CRE investments have lost a little ground, according to the National Council of Real Estate Investment Fiduciaries. Quarterly total returns for the fourth quarter of 2015—and each quarter of the year, for that matter—trended slightly downward, according to the latest NCREIF Property Index released earlier this week.

The total return for Q4 was 2.91%, compared to 3.09% in Q3 and 3.04% a year earlier. However, the year's annual total return of 13.33% was the best since 2011 and comfortably ahead of the five-year annualized average, according to NCREIF.

By property type, retail made the best showing for both quarterly and annual performance, while apartment and office remained the bottom two performers. In Q4, retail had a total return of 3.46%, edging out industrial, which returned 3.19% in the most recent quarter compared to 3.67% in Q3. Annual total returns for retail and industrial were 15.28% and 14.87%, respectively; both property types outpaced the NPI for the fifth consecutive year.

The quarterly total for hotels return slightly outpaced the overall index, at 3.03%, although this represented a decline from Q3 and the sector's annual total return slightly trailed the NPI. Apartment and office quarterly total returns were both below 3%, at 2.73% and 2.58% respectively, and both property types trailed the overall index for the year—apartments by a wider margin at 12.0% compared to 12.5% for office.