Commercial Property Pricing Maintained its Upward Trend

According to the latest numbers from the commercial real estate research firm, CoStar Group, commercial property pricing maintained its upward trend in Q3 of 2015.

Due to the increase in fundamentals and yields that are driving increased investment to the lower-end market segment, the General Commercial segment advanced 2.9% in Q3 and 11.5% for year over year.

Leading the growth is the hospitality and land segments. While the two product types took the heaviest decline after the last economic downturn, the two product types performed above all other types over the past 12 months. The land segment increased 17.8% while the hospitality segment grew 13% over the same time. Price growth for the industrial sector advanced 2.6% in Q3 and 10.9% in the past 12 months.

The year over year index growth of the multifamily segment came in behind that of hospitality and land. However, it still remain strong amid already-elevated pricing and heavy construction. According to CoStar, the Multifamily Index increased 3% in Q3 and 12.4% over the year-ago period, pushing the index 15% above its prior peak.

These indicators are signs that the economy has recovered from the last downward cycle. However it remains to be seen in 2016 if the much talked about pending increase in the federal interest rate will halt the growth in commercial real estate.