March 1, 2019
The air appears to be coming out of the commercial real estate investment market. A report by Real Capital Analytics reveals growth in U.S. prices slowed to its weakest annual pace in eight years last month.
Willem Vlaming, a senior analyst at RCA, writes “Rather than a warning of future calamity, investors are likely pausing to take stock of the financial market turmoil seen late in 2018.”
The latest RCA US National All-Property index rose 5.8% from a year earlier, and 0.3% from December.
The apartment sector price growth remained the strongest among the property sectors at an 8.8% annual pace of increase. However, the sector does not escape the waning trend, and this was the lowest increase since 2013, points out Vlaming. Apartment price growth had hovered around 12% for most of the first half of 2018.
Commercial property acquisitions dropped 31% in January from a year earlier, as shown in the new edition of RCA’s US Capital Trends. Cap rates were little changed in the month, notes RCA.
The one property type that kept the damage limited in terms of single property sales was the industrial sector, wrote Vlaming. The sector also posted steady annual price growth of 7.6%, and out of all property types had the strongest monthly price growth at 0.6%.
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