Commercial Property Prices on the Rise, with Boston Leading Metros


National commercial real estate prices showed monthly and yearly increases in September, with Boston leading price gains among the largest metros, according to a report from Moody’s Investors Service.

In September, prices for commercial real estate increased 1.4 percent from August and 6.9 percent from a year ago, Moody’s national all-property composite revealed. The composite’s components consist of the apartment and core commercial sectors, which saw monthly increases of 1.3 percent and 1.5 percent, respectively. Year-over-year, apartment and core commercial posted gains of 10.4 percent and 5.6 percent, respectively.

Within the core commercial component, retail and suburban office sectors saw prices fall by about 2 percent since last year.

Compared to the January 2010 trough, commercial real estate prices were 28 percent higher, but prices still remain 21.8 percent below the December 2007 peak.

The apartment sector has managed to come closer to its peak and stands 12.2 percent away from the December 2007 level, while core commercial is 25.2 percent below its December 2007 value. The apartment sector also sits 43.1 percent above its January 2010 trough.

Boston and New York led with the biggest yearly gains in commercial real estate out of six major metro areas measured.

In Boston, commercial real estate prices were up 10.4 percent, and in New York, prices were up 8 percent over a 12-month period. Manhattan’s 16.3 percent yearly gain brought up New York’s overall average.

Boston was also ahead of other metros for its proximity in reaching its peak. The metro sat just 1 percent below its December 2007 level. Washington D.C. was just 5.7 percent away from its peak value, and New York 7.5 percent. Los Angeles had a longer road ahead and stood 22.9 percent below its peak.

The numbers are based on Moody’s/RCA Commercial Property Price Indices, which measure price changes in U.S. commercial real estate based on completed sales of the same commercial properties over time.

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