NEW YORK CITY-Based on a growing share of distressedtransactions, commercial property price indexes (CPPI) declined by4.2% earlier this year, bringing the index to its lowest levelsince October 2007’s peak, according to a May 2011 report preparedby Moody’s, in conjunction with RealEstate Analytics, LLC and the MIT Center For RealEstate. At the same time, the CRE market is showing somesigns of life, as a recent pick-up in the volume of transactions issetting the stage for renewal, the report finds.

“The CPPI continues to bounce along the bottom as a large shareof distressed transactions preclude a meaningful recovery ofoverall market prices at this time,” says TadPhilipp, Moody's director of CRE research, in a statement.The index is now at its lowest point post peak, 47% below itsOctober 2007 peak. “Indeed, the post-peak low in price has beenreached in the same period as a post-peak high in distressedtransactions has been recorded,” he says.

In March, Moody’s says there were 182 repeat-sales transactionstotaling approximately $2.5 billion this year, an increase by bothcount and balance over February. However, the report notes thatnearly one-third of all repeat-sales transactions qualified asdistressed. “Given that it may take 12 to 24 months to foreclose ona property and execute an REO sale, there is a lag effect thatresults in fewer distressed transactions coming to market in theearly stages of a downturn and an increased level in later stages,i.e., now,” Philipp says, in a statement.