Apartment Sector Momentum Slows, S&P Reports
- Apr 24, 2008
By Erika Schnitzer, Associate EditorNew York–According to Standard & Poor’s most recent results for the S&P/GRA Commercial Real Estate Indices (SPCREX), the apartment sector has reported an annual price gain of 5.8 percent from last January. However, from December to January, the growth rate was 0.6 percent.”While prices were up slightly for December to January, the momentum has slowed and will continue to do so,” David Blitzer, managing director and chairman of the Index Committee at Standard & Poor’s, tells MHN. “I can’t tell whether we’re going to see prices flatten out of if there is a real risk of a sharp decline, but I certainly don’t see any boom times.”Consistent with today’s financial markets, all commercial real estate has dropped about 30 percent from July 2008 to the beginning of this year, explains Blitzer. Though commercial real estate in general and multi-housing more specifically have not yet significantly depreciated, the markets are unlikely to buck the effects of the financial markets turmoil.”What you see is that there is a general unwillingness to take any risks,” says Blitzer. “Investments that would not have been considered risky a year or two ago are now seen as dangerous and no one will touch them.”The S&P/GRA Commercial Real Estate Indices cover 10 commercial real estate indices, including Apartments, Office, Retail, Warehouse, Desert Mountain West, Mid-Atlantic South, Midwest, Northeast, Pacific West and National. The indices measure the change in commercial real estate prices by sector and region, and percentages are based on a three-month rolling average transaction price per square feet.