US commercial real estate returns for investment-grade properties continued to be negative in the first quarter of 2009, according to a report released by the National Council of Real Estate Investment Fiduciaries (NCREIF) based on data on holdings of institutional investors.
The total NCREIF Index, encompassing five property types (apartment, hotel, industrial, office and retail) registered a negative return of 7.3% down from 8.3% in the previous quarter. The negative return was entirely due to an 8.7% drop in values in the first three months of 2009. On an annual basis, average commercial real estate return in the first quarter of 2009 was -14.7%.
Search Our Over 200-Page Website!
Retail and Industrial registered the "best" performance among the five property types tracked by the NCREIF Index, with a quarterly return of -4.3% and -7.5%, respectively. Retail was also clearly the "best" performer on an annual basis with an annual return of -9.5%, during a period that the other property types registered negative returns above 14%.
Apartment properties registered the worst performance among the five property types tracked by the NCREIF Index, with a quarterly total return of -8.7%, followed by Hotel properties with a quarterly return of -8.55%. Hotel though was the worst performer on an annual basis with a return of -18.2%.
Commercial real estate returns varied considerably across US regions in the first quarter of 2009. The "best" performer in terms of overall commercial return (average of all five property types) was the Midwest, with a quarterly return of -5.6%, followed by the South with a quarterly return of -5.8%. The worst performer was the East with a quarterly return of -8.43%.
The important point to keep from these numbers is that all property types with the exception of Hotel showed a slight improvement compared to the fourth quarter of 2008, in the sense that returns were less negative. However, the pace of improvement seems too slow making it quite unlikely for returns to break into positive territory in the second quarter of 2009.
Related Posts
Trends in US Home Prices in May 2009
Trends in US Home Sales in May 2009
US Retail Market Forecast May 2009
US Office Market Forecast May 2009
Top Investment Markets 2009
Global Market Trends in July 2009
US Housing Market First Quarter 2009
UK Housing Market Survey May 2009
Return from Commercial Real Estate Returns to Market Watch
