Property Prices Are Now Only 1% Below Pre-Pandemic Levels

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The Green Street Commercial Property Price Index increased by 4.4% last month, with prices of every asset type included in Green Streetā€™s index increasing.

The index is now a mere 1% below pre-pandemic levels.

ā€œTop lines are improving, cap rates are declining, and property prices are quickly recovering lost ground,ā€ said Peter Rothemund, managing director at Green Street. ā€œIn some cases, like self-storage, industrial, and manufactured home parks, prices are hitting new highsā€”and are now 15-25% higher than pre-COVID marks.ā€

Buyers and sellers have been in a standoff over pricing since the pandemic began, and rising prices suggest that buyers are now more willing to negotiate on price.

ā€œWhile some discounting has occurred in unique situations, valuations of most asset types have largely held steady or surpassed pre-health crisis levels as strong buyer interest has aligned with limited for-sale inventory,ā€ Marcus & Millichap notes in a recent report on the phenomenon. ā€œThis dynamic has also led to cap rate compression among sought after assets.ā€

Pricing may also be moving because of higher transaction volume, which helps with price discovery.Ā Commercial real estate transaction volume is expected to recover relatively quickly through 2023, to $590 billion versus $500 billion in 2021, according to the Urban Land Institute.

 

Source: GlobeSt.