Feb 7, 2020 - Economy

Commercial property values decline in January, dragged by malls

Data: Green Street Advisors; Chart: Axios Visuals
Data: Green Street Advisors; Chart: Axios Visuals

The latest reading of the Green Street Commercial Property Price Index fell in January for the first time since March 2019. Prices had held steady over the previous three months and have risen just 2.1% in the last 12 months.

Why it matters: The data suggest price increases in commercial real estate have hit a standstill.

What it means: The index measures pricing of U.S. commercial properties at the current negotiated and contracted prices. January's 0.5% fall was driven by lower mall values. Pricing of other property types was unchanged, Green Street said in a release.

  • Mall pricing declined 5% from December and has fallen by 15% over the past 12 months, dragging the overall index.

The big picture: Increases in other segments of the market also have been unimpressive. With the exception of apartment (6%), industrial (13%), and manufactured home park (16%) — which collectively make up just 17.5% of the total index — no category of commercial real estate has seen even a 5% price increase over the last 12 months, Green Street's data show.

Flashback: Last month, Fed data showed U.S. commercial and industrial loans had the largest drop in nearly three years, and the total amount of C&I loans declined to levels last seen in May.

  • That data sparked worries that the woes in the manufacturing sector could be hurting the broader market.

Go deeper: Boom times expected for U.S. commercial real estate

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