SPDR S&P 500 ETF (ETF:SPY) – Commercial Real Estate Price Growth Slowing: Report

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U.S. commercial real estate price growth has eased from recent all-time highs in March, according to data from the National All-Property Commercial Property Price Index (CPPI) released by Real capital analysis (RCA).

What happened: Last month’s CPPI National All Goods Index fell 0.4% from February, marking the first time since June 2020 that it recorded a month-over-month decline. Year-over-year, the index rose 17.4%.

The drop was attributed to a slowdown in retail price growth. The index covering this sector fell 0.7% from February, its first drop in two years. And while the index rose 16.3% from a year earlier, RCA observed that there was “a slowdown from the pace seen in recent months”.

In other areas of commercial real estate, RCA said apartment prices saw a 22.4% year-over-year increase and a 1.1% rise from February. Suburban office buildings posted a 9.3% year-over-year increase, while prices for commercial business districts rose 7.5% after falling for much of 2021 The Industrial Property Index had the best year-over-year performance with a 30.1% increase.

See also: Housing Beat: Mortgage Rates Surpass 5% Level; Buyers settle on smaller homes

What else happened: Commercial real estate also continued to perform well for investors in commercial mortgage-backed securities (CMBS). According to data released earlier this month by Trepp LLC, the CMBS delinquency rate in March was 3.73%, down 14 basis points from February. March continued a decline in CMBS delinquencies that has been seen in 20 of the past 21 months.

“In March, the hotel delinquency rate dropped sharply as loans in this segment continue to heal (or go from delinquent to current) at an impressive rate,” said Manus Clancy, Senior Managing Director and Head of Applied Data, Research and Pricing at Trepp. “The delinquency rate on hotel loans fell below 7%, down 95 basis points month-on-month. During the first months of the COVID-19 pandemic, the delinquency rate hotel business jumped to about 25%.”

Photo: Meredith P./Flickr Creative Commons

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