Commercial property prices have stalled. Above, the Seattle skyline. (Associated Press )
U.S. commercial real estate values are drifting sideways after a two-year rally, analysts said.
Prices for offices, warehouses, shopping centers and apartment buildings in major cities rebounded to within 10% of their record highs before leveling out six months ago, according to Green Street Advisors Inc.
“I think people are used to values going up or down,” analyst Peter Rothemund said, adding that it’s not abnormal for prices to be flat.
Rothemund blames the stall on a tug-of-war between investors’ desire to take advantage of low interest rates for buying real estate and their fear that the economy might falter and prevent them from making money on property.
With Europe’s financial instability, “the world is perceived to be riskier,” he said. “An economic outlook that is far more unsettled than usual is serving as an anchor.”
The Green Street property price index peaked in 2007 and hit bottom in 2008. Its latest report includes December sales figures.
Southern California office and apartment values are still weaker than most other major markets, Rothemund said. Cities including San Francisco that are home to strong business sectors such as technology are doing better at leasing up offices and driving up rents.
Apartments in general are the strongest real estate sector, with values in most markets back to peak levels.
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