U.S. commercial-property price gains slowed in the past three months as concern over Europe’s debt crisis reduced the availability of financing for real estate transactions, Moody’s Investors Service said.
The Moody’s/RCA national all-property composite index was little changed in March from February and up 12 percent from a year earlier, Moody’s said in a report today. Price advances have slowed, with the measure gaining 1.8 percent from the end of 2011.
Demand for commercial property has increased since the U.S. real estate slump, with values recovering 28 percent since the market bottomed in January 2010, according to New York-based Moody’s. Multifamily buildings have led price gains as consumers shunned buying homes and opted for renting apartments. Suburban offices performed the worst in March, with prices falling 3.5 percent from February.
“The increased cost and decreased availability of capital-markets debt in the wake of ongoing euro-area sovereign stress has filtered its way into the prices of recently closed transactions,” Moody’s said. “Apartment prices in major markets have shown the strongest recovery.”
Multifamily building prices rose 18 percent in the 12 months through March, the strongest performance for the year among all index components, according to the report. Apartment properties in major markets have recovered 87 percent of the value lost since their trough in December 2009, Moody’s said.
The report was the first on the Moody’s/RCA index, which is calculated using sales data from Real Capital Analytics Inc., a New York-based research firm. Moody’s ceased publication of its previous index in November.
The new measure places greater weight on transactions in major markets that have less property distress and more liquidity, according to the companies. Data will be released monthly for the composite gauge and 20 subindexes, some of which were previously reported quarterly.