Hospitality Property Values Rebound in 1Q11

New York—In 2010 the hospitality/lodging market experienced the greatest decline of commercial real estate sectors. But for the first quarter of 2011, Integra Realty Resources’ Commercial Property Index finds that the sector has experienced the second-best growth prospects, after the multifamily sector. While this quarter’s survey shows that lodging properties experienced the greatest decline in value over the past 12 months (down 1 percent), the sector is expected to increase 2 percent in the coming six months.

The survey uses Integra’s national database and a polling system to determine the rate of change in property values across the country and in all property types, including multifamily, lodging, industrial, retail and office. Integra is North America’s largest independent commercial real estate consulting firm that specializes in the valuation of commercial real estate.

“Multifamily properties continue to show the greatest strength in virtually all regions, most notably in the East,” says Integra President and COO Jeffrey Rogers. “In the past year alone, the multifamily sector has seen a 12 percent increase in property values.”

Multifamily saw a 7 percent increase over the last year. Office had the smallest increase (0.25 percent).

In the next six months, Integra Realty Resources expects all commercial property sectors to increase in value, with the exception of Southern office and retail, which are expected to stabilize in value. When comparing the regions’ performances in the first quarter, the East surpassed last quarter’s Western region as the best performing region.

All geographic regions have entered a recovery market cycle. When analyzing Integra’s 1Q assignments, the Eastern and Western regions have the lowest amounts of assignments classified as distressed assets. The Southern region follows closely behind with 39 percent of assignments classified as distressed assets. The Central region of the country is faring a bit worse, 52 percent distressed.