National commercial property values stabilize

August 23, 2011 |

Commercial real estate property values have remained consistent in the past three months, according to the results of Integra Realty Resources’ July 2011 Commercial Property Index.

This survey uses Integra’s extensive national database and a polling system to determine the rate of change in property values across the country and in all property types, including multifamily, lodging, industrial, retail, and office.

This survey shows that the multifamily sector experienced a dramatic increase in value (7%) over the past 12 months. In the past quarter, the multifamily sector’s values dropped a bit to an increase of 2.5%. All other sectors continued to stay in the positive, and either stabilized (industrial) or fluctuated around 1%.

When comparing the regions, the East has demonstrated the best performance, with its multifamily sector increasing 3% and its office sector 2% in value in the past quarter, while the Southern region has performed the worst, as its office and industrial sectors have had no increase or decrease in value. Property values will incrementally increase across all industry sectors in the next six months, with the exception of Central office and industrial and Southern industrial, which will be stable. Eastern, Southern, and Western multifamily is expected to increase in value the most (3%), with Western lodging following closely behind (2%).

The survey also shows that commercial real estate continues to be in a recovery mode. That being said, some regions have experienced an increase in the number of distressed assets. The Southern region of the country increases from 39% of properties being distressed in Q1 to 47% in July 2011. The Eastern region increased from 29% of distressed assignments in Q1 to 33 percent in the past three months. The Central region of the country decreased six percent in July to have only 46% of assignments classified as distressed assets and the Western region having 30% of its assignments classified as distressed assets.

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