Commercial property price growth holds steady after recent record highs

The apartment, industrial, and office sectors reported growth despite the cooling market

Commercial property price growth holds steady after recent record highs

Price growth for US commercial properties have remained close to the record-highs recently achieved, supported by price gains in the industrial and apartment sectors this May, MSCI reported.

The RCA commercial property price indices (CPPI) National All-Property Index climbed 18.6% from May last year, dipping slightly from the highest annual growth rate (19.3%) recorded in January. Industrial prices rose 1.8% from April 2022 and 28.6% from May 2021 – another record annual rate – even as industrial deal volume retreated for a second consecutive month.

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The annual rate of growth for apartment prices has also hit an all-time high, with May’s 23.3% pace matching April’s record rate. The index for retail properties climbed 18.8% from the previous year. While still a double-digit growth rate, MSCI noted that the pace has eased for three consecutive months.

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The office sector index grew 12.2% annually, primarily driven by a 13.4% increase in prices of offices in CBDs – the fastest rate of growth for CBD offices since 2014. Suburban office prices increased 10.5% from a year prior, while growth in the index for suburban offices has remained unchanged or decelerated for eight months in a row.