IRVINE, CA—Commercial property pricing rebounded in April, posting month-over-month gains of 56 basis points overall, Ten-X said Thursday in reporting the results of its latest Commercial Real Estate Nowcast. That improvement extended to all property sectors aside from hotel, which continues to see pricing declines.
“Even though the April all-sector increase is significantly stronger than the prior month's slight gain of 0.2%, this still is the slowest annual growth rate in pricing for the cycle,” says Peter Muoio, chief economist at Ten-X. “April's uptick in growth was seen across all major CRE sectors except hotel, where that segment's fundamentals, as well as its pricing, continue dwindling. Meanwhile, the apartment sector displays the strongest pricing trends with a 1.8% gain in April.”
The 7.0% all-sector increase in pricing from a year ago came in below March's 7.6% Y-O-Y gain, despite the stronger month-to-month increase seen in April. However, in most sectors April's results represented a reversal of flat or declining valuation trends seen in March.
The one exception, as suggested by Muoio's comments, was lodging. Ten-X's hotel nowcast declined by 1% from March for its sixth consecutive monthly decline. Hotel valuations are up just 0.5% from a year ago. Ten-X cites declines in hotel fundamentals including occupancy, as well as declines in Google search trends, one of the metrics on which the firm bases its Nowcast indexes.
This month's results continue the trend identified by Muoio a month ago. “With Airbnb becoming a bigger part of the hospitality landscape, the prospects for foreign travel decidedly weak and early-year fears of the economy derailing, we are not surprised that the survey participants have cooled on hotels,” Muoio said in March.
Apartments fared considerably better. Multifamily was the sole exception to March's series of flat or down pricing trends, and April continued in the same vein with a 1.8% monthly increase.
That being said, the apartment nowcast is up just 8.9% from the year-ago period, for its lowest reading since March of last year. Investors in the sector remain more cautious on cap rates than in prior months, Ten-X says, even while Google search trends and pricing on the Ten-X platform remain strong.
April's office nowcast was boosted by stronger pricing on the Ten-X platform, improved investor outlooks and stronger Google search terms. Office reversed course this past month after three consecutive monthly declines, rising 0.7% from March. However, Ten-X says office is up just 2.2% from a year ago, its lowest level of the current cycle.
Retail and industrial, which were both flat in the March nowcasts, gained in April. The retail nowcast rose 0.9% in April and is now up 9.4% from a year ago. In the most recent month, retail was buoyed by higher investor expectations although online search trends dragged.
The gain for industrial was more modest at 0.4%, although its cumulative result is the best of the five CRE segments. It's up 16.4% from a year ago; Ten-X sees strong industrial expectations among investors, and Google search trends remain supportive of pricing. The GlobeSt.com Thought Leader combines Google Trends data, Ten-X's proprietary transaction data and investor surveys to forecast CRE pricing trends in real time for its monthly nowcasts.
IRVINE, CA—Commercial property pricing rebounded in April, posting month-over-month gains of 56 basis points overall, Ten-X said Thursday in reporting the results of its latest Commercial Real Estate Nowcast. That improvement extended to all property sectors aside from hotel, which continues to see pricing declines.
“Even though the April all-sector increase is significantly stronger than the prior month's slight gain of 0.2%, this still is the slowest annual growth rate in pricing for the cycle,” says Peter Muoio, chief economist at Ten-X. “April's uptick in growth was seen across all major CRE sectors except hotel, where that segment's fundamentals, as well as its pricing, continue dwindling. Meanwhile, the apartment sector displays the strongest pricing trends with a 1.8% gain in April.”
The 7.0% all-sector increase in pricing from a year ago came in below March's 7.6% Y-O-Y gain, despite the stronger month-to-month increase seen in April. However, in most sectors April's results represented a reversal of flat or declining valuation trends seen in March.
The one exception, as suggested by Muoio's comments, was lodging. Ten-X's hotel nowcast declined by 1% from March for its sixth consecutive monthly decline. Hotel valuations are up just 0.5% from a year ago. Ten-X cites declines in hotel fundamentals including occupancy, as well as declines in
This month's results continue the trend identified by Muoio a month ago. “With Airbnb becoming a bigger part of the hospitality landscape, the prospects for foreign travel decidedly weak and early-year fears of the economy derailing, we are not surprised that the survey participants have cooled on hotels,” Muoio said in March.
Apartments fared considerably better. Multifamily was the sole exception to March's series of flat or down pricing trends, and April continued in the same vein with a 1.8% monthly increase.
That being said, the apartment nowcast is up just 8.9% from the year-ago period, for its lowest reading since March of last year. Investors in the sector remain more cautious on cap rates than in prior months, Ten-X says, even while
April's office nowcast was boosted by stronger pricing on the Ten-X platform, improved investor outlooks and stronger
Retail and industrial, which were both flat in the March nowcasts, gained in April. The retail nowcast rose 0.9% in April and is now up 9.4% from a year ago. In the most recent month, retail was buoyed by higher investor expectations although online search trends dragged.
The gain for industrial was more modest at 0.4%, although its cumulative result is the best of the five CRE segments. It's up 16.4% from a year ago; Ten-X sees strong industrial expectations among investors, and
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