U.S. Commercial Real Estate Pricing Update

U.S. commercial real estate prices rise in February - Moody's04.21.08, 12:26 PM ET

MUMBAI (Thomson Financial) - Commercial real estate prices in the united states, as measured by Moody's/REAL Commercial Property Price Indices (CPPI), rose 2.1 percent in February, offsetting most of the losses the CPPI had posted since October.
'We interpret the CPPI's increase in February as a continuation of the process of price discovery, which is likely to continue over a protracted period, possibly a few more quarters,' Moody's (nyse: MCO - news - people ) said.
Volumes may be down because prices have not yet adjusted to market conditions. For the time being, a large gap persists between what buyers are willing to pay and what sellers are willing to accept, Moody's said.
The increase in the CPPI in February places the year-over-year increase in prices for the month at 4.2 percent. The two-year change in prices was 12.9 percent for February.
Moody's continues to expect commercial property prices to fall about 15 percent to 20 percent before bottoming out, but says several forces are at work to slow down recognition of the decline in the CPPI.