Commercial Property Price Index
Mall Values Fall, Again
The Green Street Commercial Property Price Index declined by 0.5% in January. The decrease in the index, which measures pricing of a broad swath of U.S. commercial properties, was driven by lower mall values. Pricing of other property types was unchanged.
“Supported by low interest rates, prices of most property types have been steady or rising,” said Peter Rothemund, Managing Director at Green Street Advisors. “The exception has been malls. A secular shift away from department stores and other mall retailers has caused many investors to red-line the space, and best-guess estimates put prices as much as 30% below the levels of three years ago.”
Green Street’s Commercial Property Price Index is a time series of unleveraged U.S. commercial property values that captures the prices at which commercial real estate transactions are currently being negotiated and contracted. Features that differentiate this index are its timeliness, its emphasis on high-quality properties, and its ability to capture changes in the aggregate value of the commercial property sector. Learn more.
Green Street Commercial Property Price Index
Indexed to 100 in August 2007Download CPPI Report Download CPPI Data
All Property CPPI weights: retail (20%), office (17.5%), apartment (15%), health care (15%), industrial (10%), lodging (7.5%), net lease (5%), self-storage (5%), manufactured home park (2.5%), and student housing (2.5%). Retail is mall (50%) and strip retail (50%).
Core Sector CPPI weights: apartment (25%), industrial (25%), office (25%), and retail (25%).
Change in Commercial Property Values
Amount property values have increased over this period
What makes our commercial property price index unique?
There are significant differences between the Green Street CPPI and other indices that track commercial property prices. Green Street’s CPPI is appraisal-based. Appraisal-based indices are only as good as the valuation estimates used to construct them, and Green Street has long devoted sizable resources to deriving accurate estimates of the values of the properties owned by REITs. Most other indices are transaction-based.
The index is based on Green Street’s frequently updated estimates of price appreciation of the property portfolios owned by the REITs in its U.S. coverage universe. Since REITs own high-quality properties, the index measures the value of institutional-quality commercial real estate.
Our index reflects changes in commercial property values as soon as we hear about them. That’s one of the benefits of an appraisal-based index; we don’t have to wait for deals to close. Most other indices are based on closed transactions, so they convey information several months old.
We place more weight on high-quality properties, e.g. a New York skyscraper has a much greater impact than a suburban strip mall. Because our CPPI is value-weighted, it measures what’s happening to real estate prices in aggregate, similar to the Wilshire 5000 that measures what’s happening to the stock market in aggregate. Most property indices are equally-weighted.