CPPI Up For Third Month In A Row

By Allen Kenney

The Moody's/REAL Commercial Property Price Index gained 1.0 percent in January, the third monthly increase in a row.

Pricing hit a low in October, down 43.7 percent a high hit two years earlier. Three months later, the CPPI is up more than 6 percent.

In a report accompanying the latest data release, the analysts with Moody's Investors Service warned that three consecutive months of gains don't necessarily make for a sustained recovery.

"Some positive sentiment has been building recently for high quality properties, but of course this is a small part of overall property markets.  The broader economy remains under pressure and while the positive returns of the past three months are certainly welcome, passengers are advised to keep their seatbelts fastened in case of further turbulence," the analysts wrote.

In particular, they noted that low transaction volume is hindering price discovery in the commercial real estate market. While transactions moved up in December, sales were down in January. The 376 transactions in January represented an 8 percent decrease from the year-earlier period.

"Commercial property markets are still largely frozen and the wholesale extension of loan maturities by banks and other lenders has delayed the establishment of market-clearing prices on underlying properties," the Moody's analysts said.