Here’s some good news for commercial real estate, even as cap rates soar, rents aren’t falling — at least they didn’t in Q2.
FT: The price of offices in the US rose in the second quarter for the first time since 2007, offering a glimmer of hope for the stricken commercial property market, according to a report on Wednesday from Moody’s, the ratings agency.
In the last 12 months, US commercial property prices across all sectors fell by nearly 27 per cent, the Moody’s/Real commercial property price index showed. From April to June, however, US office prices rose by 4.1 per cent, the first increase since the second quarter of 2007.
But! (You know there was a but)
…there is a divergence within the overall market, with office prices falling in major cities but ticking up in smaller secondary areas. Meanwhile, industrial, retail and apartment buildings are continuing to suffer and the overall index slipped by 1 per cent in June.
So companies are deserting cities, and snapping up space in the ‘burbs, saving on rent, and (possibly) passing transportation costs to their employees. Oh, and what, you don’t like having a commute, and having to get lunch at the local Ruby Tuesday? Find a job somewhere else.
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