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On The Rise
Commercial Property Price Index Increases Again
BY PETER ROTHEMUND
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roperty prices have been creeping higher due to NOI growth and, in a few sectors, lower cap rates. Looking forward, the increase in Treasury yields over the past three months is a headwind. Pricing is likely to drift sideways for a bit.

The Green Street Commercial Property Price Index® increased 1.6 percent in May. Over the past 12 months, the all-property index has increased 4.1 percent.

See Green Street Commercial Property Price Index chart.
See Change In Commercial Property Values chart.
See Sector-Level Indexes table.
See Cumulative Change In Commercial Property Price Index: Past Seven Years chart.

Green Street’s Commercial Property Price Index® is a time series of unleveraged U.S. commercial property values that captures the prices at which commercial real estate transactions are currently being negotiated and contracted. Features that differentiate this index are its timeliness, its emphasis on high-quality properties, and its ability to capture changes in the aggregate value of the commercial property sector.

Green Street Commercial Property Price Index®
Change In Commercial Property Values
Sector-Level Indexes
Commercial Property Price Index: Past Seven Years
Key Attributes of Green Street’s Commercial Property Price Index®
  • Institutional Quality – The index is based on Green Street’s frequently updated estimates of price appreciation of the property portfolios owned by the REITs in its U.S. coverage universe. It is driven by the NAV models maintained by the research team, which, in turn, are driven primarily by changes in market cap rates and NOI growth. Since REITs own high-quality properties, the index measures the value of institutional-quality commercial real estate.
  • Timeliness – Other indexes, based on either closed transactions or formal appraisals, reflect market prices from several months earlier. Also, the Green Street index value for a given month is released within days of month-end, whereas other indexes have a sizable lag.
  • Gauge of Aggregate Values – Akin to familiar stock price indexes (e.g., S&P 500), asset value weighting provides a gauge of aggregate (as opposed to average) values. Equal-weighted indexes, by contrast, put the same emphasis on a small suburban strip center as they do a Manhattan office building.
Peter Rothemund, CFA, is the co-head of strategic research at Green Street.
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