Pricing across a variety of property sectors remained flat in January, according to the Green Street Commercial Property Price Index—with the surprising exception of the hotel asset class, which posted unexpected improvements in valuation.

Green Street’s total price index increased by 1.1% in January, an uptick that reflects higher valuations for hotel properties and stagnation in other property sectors. The all-property index remains 7% below pre-pandemic levels.  

Peter Rothemund, managing director at Green Street says that when transactions do start “we expect to see more upside surprises than the other way around,” and that uncertainty around pricing should clear over the next few months as dealmaking increases. 

“Pricing of properties where the top line is less affected by the pandemic are flat to higher versus a year ago,” Rothemund says in prepared remarks. “Property types heavily impacted by shutdowns—or where the ultimate impact from Covid is unknown—are seeing weaker pricing. The exact magnitude of price declines in these sectors, however, is unknown given little product is trading.”

The Green Street Commercial Property Price Index was unchanged in December, when research showed a predictable price decrease of around 8% across all CRE asset classes last year. While industrial and manufactured home park values registered an increase of 10% in 2020, pricing in the hardest-hit sectors were in freefall by as much as 25%.

The hotel sector is grasping for light at the end of the COVID-19 tunnel as private equity and institutional investors begin returning to the market. Recent JLL research shows that private equity and institutional investors were responsible for 54% of total hotel transactions last year, and the firm predicts they’ll continue driving investment activity into 2021. In 2020, private equity raised $2.5 billion in closed-end funds for hotel investment, a level matching 2016 investments. JLL predicts resort properties will be the big winners in 2021 and will likely account for 35% of total hotel investment volume this year.