Quarterly Update of NCREIF-MIT Commercial Property Value Changes for Q3 2010
Posted by Ted C. Jones on January 19, 2011
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Following is an update on commercial real estate values across the country as of the third quarter of 2010. (For the full details of this refer to the Blog posting February 12, 2010) And for a comparison to Q1 2010 results, see June 2, 2010 post
MIT tracks prices from properties sold from the NCREIF database. (National Council of Real Estate Investment Fiduciaries) NCREIF basically consists of tax-exempt (retirement managed) real estate. NCREIF generates a total property returns index (see the data links in the February 12 2010 blog posting). These price changes vary across property types and across locations. This database as of Q3 2010 included 6,057 properties with an estimated market value of $238.3 billion.
Of course how much property values have declined is relative to the time of acquisition. Using the MIT data, a grid comparing implied current values based on time of acquisition follow in the table. It shows the estimated current change in value since the date of purchase as of Q3 2010 of income-producing real estate across multiple property types:
Apartments
Industrial
Office
Retail
Apartments are the first segment (not surprisingly) showing a price recovery and was the only property-type showing an increase in values from Q2 2010 to Q3 2010.
The impact? Limited refinancing capacity and lending on new purchases will continue to put pressure on commercial real estate values (from the glass half-empty perspective). Yet prospective buyers have not seen opportunities like this since the late 1980s provided they bring significant equity to the table (the glass half full view). Simply stated, this is the best buying opportunity for commercial real estate since 1988 and 1989. Fortunes will be made by those who act.
And these depressed prices should give a rally cry to all property owners in “This is the time to vigorously appeal property taxes.” And be aggressive!
I encourage you to click the link below and take a look at the data series and resources available from NCREIF at:
http://www.ncreif.org/property-index-returns.aspx
In additional to the price series on the four commercial property types included in this blog, others include timberland, rural land and Townsend Indexes (private equity real estate funds).
Very informative article regarding MIT’s involvement in tracking property prices. We have been actively involved in advertising realtor businesses on websites and articles like this will keep them informed of what is happening around the country. One of my clients of Homes for Sale San Antonio Tx will be happy to learn about your website. I will be talking to him about the information provided by your article.
I just came across your blog and wanted to say that I’ve really liked reading your posts on best buying opportunity for commercial real estate. Anyway I’ll be subscribing to your blog and I hope you post again soon about property. Thanks.
Keep up the great work…. How about an update for 2011?
These reports by MIT cements the fact that as far as investing in real estate is concerned, these are the good times. Whether you are interested in buying a home or a commercial property, there are a lot of different opportunities available.
I would be interested in hearing more concerning the subject however I can seem to find appropriate reports.
This was actually what I was looking for, and I am glad I came here! Thanks for sharing the such information with us.