Commercial Property Price Index
Industrial Property Values Increase
The Green Street Commercial Property Price Index increased by 0.4% in June. The increase was driven by higher values for industrial properties. Over the past year, the all-property index has increased by 1.8%.
“There have been pockets of strength and weakness, but for the most part, commercial real estate pricing has been rather unexciting, as values have been rising at a modest pace for some time now,” said Peter Rothemund, Managing Director at Green Street Advisors. “Industrial, however, is one of the properties types that has been in favor, and pricing on Blackstone’s acquisition of the GLP portfolio suggests cap rates have continued to move downward of late.”
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.