Green Street Commercial Property Price Index Rises in October 2019
The Green Street Commercial Property Price Index* (CPPI) gained 0.5% month-over-month in October. The all property** index is up 1.1% over the past 3 months and 2.4% over the past 12 months. The core sector index, which is calculated based on an equal weighting of apartment, industrial, office, and retail, was up 1% from September and from the past 3 months, while it gained 4% during the last 12 months.
“While commercial property as a whole is only up a couple of percent this year, there are many property types that have had better gains,” said Peter Rothemund, Managing Director at Green Street Advisors. “Apartment and self-storage are up 5%, industrial 10%, and manufactured home parks have seen prices rise nearly 15%. Other property types are around that 2% national average, though that is not true of mall values which may be down as much as 10% this year.”
With an October reading of 107.4, the mall index is down 13% over the last 12 months, making it the only property type in the Green Street Index that’s down on the year. Lodging is also underperforming as its current reading of 109.2 is equal to one year ago. Other sectors with little growth over the last 12 months include healthcare and net lease (each 1%).
Manufactured home parks are currently the best performing commercial property type during the last year. The index score of 230.2 represents 20% growth. Other strong performing sectors include industrial (12%), apartment (6%), self-storage (5%), and student housing (5%).
According to a report from Marcus & Millichap, a shortage of affordable housing units is causing increased demand for manufactured home parks. Apartment vacancy rates have declined over the last 12 months in all regions of the nation, leading to a general rise in rents. This trend is expected to continue in the quarters ahead as construction of new affordable housing units is not expected to keep pace with demand, with many consumers choosing manufactured home parks as a result.
*Indexed to 100 in August 2007 *All Property: retail (20%), office (17.5%), apartment (15%), health care (15%), industrial (10%), lodging (7.5%), net lease (5%), self-storage (5%), manufacturing home park (2.5%) student housing (2.5%)
CCIM 4Q19/1Q20 CRE Insights Report