Office and Industrial Property Values Showing Signs of Stabilization
Integra Realty Resources releases national 3Q 2010 Commercial Property Index
NEW YORK-October 26, 2010-Commercial real estate property values, with the exception of retail, have experienced continued improvement in the past quarter according to the results of Integra Realty Resources' (Integra) 3Q 2010 Commercial Property Index . This survey uses Integra's extensive national database and a polling system to determine the rate of change in property values across the country and in all property types, including multifamily, lodging, industrial, retail, and office. Integra is North America's largest independent commercial real estate consulting firm that specializes in the valuation of commercial real estate. "The big news is that the office and industrial sectors are showing signs of stabilization," said Jeffrey Rogers, President and COO of Integra Realty Resources. "Having registered slight declines over the past three months, office and industrial values are expected to trend sideways over the next six months. As predicted in our previous 2Q 2010 Commercial Property Index, the multifamily sector has bounced back. That being said, retail properties are still showing signs of weakness and stabilization will not likely be reached until late 2011."
This quarter's survey shows that lodging (-8 percent) and retail (-8 percent) property experienced the greatest declines in value over the past 12 months. In the past quarter, the multifamily sector is the only sector that increased in value (2 percent). The retail and industrial sectors' rate of decline was the same as last quarter (-1 percent), and the office sector (-2 percent) and the lodging sector (-1 percent) also experienced minor declines in value.
The good news is that in the next six months, only the retail sector is expected to experience a rate of decline (-1 percent), while the multifamily sector is projected to increase in values of 2 percent. Office, industrial and lodging sectors are expected to stabilize without any increase or decrease in value.
When comparing the regions, the East has continually demonstrated the best performance, with its multifamily sector increasing 4 percent in value in the past quarter. The West has performed the worst, with its office sector experience a -6 percent rate of decline and its industrial sector experience a -4 percent rate of decline.
In the next six months, property values are expected to increase across all property sectors in the East, from 1 percent for office, retail and industrial sectors, to 2 percent for the lodging sector and 3 percent for the industrial sector. In the Southern region of the country, all industry sectors are displaying signs of stabilization, with the multifamily sector experiencing an increase of 2 percent. The Central region also shows signs of recovery with office and lodging sectors stabilizing, the multifamily and industrial sectors increasing (2 percent), and retail experiencing a rate of decline (-2 percent). Western multifamily is expected to increase (1 percent), while the industrial and lodging sectors experience a decrease of -2 percent in value and office and retail experiencing a decline of -3 percent.
The Integra survey also shows that commercial real estate continues to be recessionary. The Western and Central regions of the country have held steady with 49 percent and 39 percent, respectively, classified as distressed assets. Southern distressed assets decreased from 52 percent in 2Q 2010 to 45 percent this quarter and Eastern distressed assets decreased from 35 percent to 27 percent.
ABOUT INTEGRA REALTY RESOURCES, INC. (IRR)
With corporate offices in New York City, Integra Realty Resources, Inc. is an independent real estate valuation and consulting firm that offers local expertise on a national scale with 59 offices and 850 credentialed consultants and staff located across the United States and in Mexico. Founded in 1999, the Firm specializes in real estate appraisals, feasibility studies, market studies, expert testimony, and related property consulting services. Many of the nation's largest and most prestigious financial institutions, developers, corporations, law firms, and government agencies are among its clients. Because of the high quality of its professionals, integrated systems, and state-of-the-art technology IRR is capable of handling a wide array of assignments and producing high quality, meaningful results on a timely basis. Please call Integra for your next assignment or visit us at www.IRR.com
