U.S. Commercial Property Prices Drop for First Time in Six Years

By Kara Wetzel

March 7 (Bloomberg)

Values fell 0.3% in January from prior month, Moody’s says.

Decline is `significant milestone’ showing shift in sentiment

U.S. commercial real estate prices dropped in January for the first time since 2010, a sign of weakening demand by investors after a six-year rally that pushed values to records.

The Moody/RCA Commercial Property Price Index slipped 0.3 percent from December, Moody’s Investors Service said in a statement Monday. The decline was led by office and industrial buildings, which each had a price drop of more than 1 percent.

“This is a significant milestone that signals that a shift in sentiment among commercial-property investors is under way,” Moody’s said in the statement.

Now Coming to the Commercial-Property Market: Defaults

March 8 (WSJ) — New signs of weakness are surfacing in the commercial-property market, ending a half-decade run of improvement with steadily climbing values. Broader market volatility has caused lenders who sell off their loans via bonds known as commercial mortgage-backed securities to grow wary. While the segment made about $100 billion in loans last year, it has come to a virtual halt today, lending executives said. If that continues, it will become more difficult for landlords who took out 10-year loans in 2006 to refinance today.