Quarterly Update of NCREIF-MIT Commercial Property Value Changes for Q3 2010
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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 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:
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).