COMMERCIAL PROPERTY VALUES Trends Q3 2009

The rate of decline of US commercial property values continued decelerating in Q3 2009, according to the latest data released by the National Council of Real Estate Investment Fiduciaries (NCREIF).

In particular, as the graph below indicates, the rate of value declines (as measured by the appreciation return reported in the NCREIF release) of US investment grade commercial property has decelerated from -9.54% in the fourth quarter of 2008 down to -4.88% in the third quarter of 2009.

As a result of the decelerating rate of value declines, total commercial property returns have "improved" from -8.29% in the fourth quarter of 2008 to -3.32% in the third quarter of this year.

Changes in Commercial Property Values: Q4 2008 - Q3 2009

Source: NCREIF

Apartments posted the "best" performance nationally in Q3 2009 with a total return of -3.0%, driven by a 4.3% decline in values.

Hotels posted the worst performance with a total quarterly return of -4.5%, driven by a 5.6% drop in values.

Retail was the second "best" performing sector with a -3.1% total return and a 4.8% drop in values while industrial was the second worst performing sector with a -3.9% total return and a 5.7% drop in values. Office lined up with national average performance with a -3.3% total return and a 4.9% decline in values.

The rate of decline of commercial property values in all sectors, but retail, decelerated considerably compared to the second quarter of 2009. In the case of retail the rate of value declines increased slightly from 4.56% in the second quarter of 2009 to 4.75% in the third quarter of 2009.

Search Our Over 500-Page Website!

Custom Search

Real Estate Investment Mathematics!
Download all these formulas Now!
Internal Rate of Return(IRR)
The 3 Formulas for Modified IRR (MIRR)/Financial Management Rate of Return (FMRR)
Potential Gross Income Multiplier (PGIM)
Potential Gross Income
Effective Gross Income Multiplier
Effective Gross Income
Net Income Multiplier
Net Operating Income
Overall Capitalization Rate/Income Return
Capitalization Factor
Band-of-Investment Formula for Estimating a Market/Required Capitalization Rate
Theoretical-Approach Formula for Estimating a Market/Required Capitalization Rate
Appreciation Return
Total Return
Return on Total Capital (ROR)
Return on Equity (ROE)/Cash-on-Cash Return/Equity Dividend Rate
Before Tax Equity Cash Flow (BTECF)
Equity Investment
Loan Amount
Debt Service
Mortgage Constant
Payback Period
Breakeven Occupancy
After Tax Cash Flow (ATCF)
Taxable Income
One-Period IRR
Income Tax Payment in Association with Income Producing Property
Capital Gains
Formula for Cash Flow for Last Period of Analysis
Future Resale Price
Annual Rental Income of Occupied Multi-Tenant Property
Multi-Period Lease Rate Growth Formula with Intertemporally Variable CPI Forecast
Multi-period Lease Rate Growth Formula with Constant CPI Forecast
Present Value (PV)
Net Present Value (NPV)
Profitability Index
And more …….

Search Our Over 500-Page Website!

Custom Search

SBI!

The Rate of Decline of US Commercial Property Values Continued Decelerating in Q3 2009

Changes in Commercial Property Values: Q4 2008 - Q3 2009