The commercial property market of the United States has recorded its second-best January ever, but expert says this masks some warning signs. Meanwhile, the CRE has also experienced its first value decline in five years.
In a report by Yahoo! Finance, Real Capital Analytics has revealed that the U.S. commercial real estate has scooped as much as $44.6 billion in transactions last January from properties including office complexes and income-producing apartment buildings worth more than $2.5 million.
When the January amount is combined with the $73 billion worth of transactions in December 2015, the commercial market's dollar total is up 12 percent from the previous year, the highest dollar total in any 60-day period. On one hand, the number of transactions is down by 7 percent.
Jim Costello, vice president of Real Capital Analytics. "It is the momentum issue that's of concern. A sign of reduced liquidity and fewer transactions, that's a bit of a caution flag. ... It's still a huge number of deals that happened in in the month, but it's a momentum issue that has people concerned."
But despite this and the growing global economic turmoil, Costello said there's still something to be positive about, saying that the U.S. is still a secure place to put investments on and is still one of the fastest growing country.
Prices of commercial real estates have increased rapidly in the past years to sky-high levels. And while analysts predict a flat growth, a recent report has revealed that the country's commercial real estate value has declined for the first time since 2011. According to Ten-X Commercial Real Estate Nowcast via PRNewswire, there is a 26 basis points drop in commercial valuations in February compared to the previous month. The all-sector plunge is largely attributed to the fall in hotel and office monthly prices.
