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RCA Reports U.S. Price Growth Slips in 2018

New research by Real Capital Analytics (RCA) shows U.S. commercial real estate prices slipped in December 2018 to the most subdued annual growth rate since 2012. The US National All Property Index rose 6.2% from a year prior, down from the 8.5% growth seen at the start of 2018, according to the latest RCA CPPI summary report

RCA’s Elizabeth Szep writes, “Monthly price gains also edged lower. Prices rose 0.3% in December from November, slower than the 0.5% average monthly rate for the first 11 months of the year. Across the property types, prices sit 26% above their peak prior to the Global Financial Crisis. However, when taking inflation into account, growth is more modest at 4% above those 2007 highs.”

She points out that annual price growth in the six major metros registered a slowed 2.8% YOY gain, while growth in non-major locations came in at a 7.6% rate. Growth in several major metro locales has been flat-to-declining in 2018, and that has placed a major drag on national growth among property types.

The strongest property type in December was apartments, with price growth of 8.9% YOY, though it slowed from the double-digit pace set at the start of 2018. Increases have been driven by gains in secondary and tertiary markets since 2016.

Suburban office was the surprise of 2018, registering year-end growth second only to apartments, at 8.2% YOY, a figure nearly double the rate this sector registered at the end of 2017.

Industrial properties logged strong growth for the year – up 7.9%, as investors continue to flock to the sector to buy their position in the national supply chain. The volume of industrial property sales in 2018 was greater than any year since Real Capital Analytics began tracking property markets.

CBD office prices have been shaky since the start of 2017, and rounded out 2018 at nearly flat growth of 0.4% YOY. Most of the six major metros are registering some softening in their central office areas, and investors have clearly felt priced out of these locales for some time, opting instead to invest in suburban areas, notes RCA’s Szep.

Retail had a blockbuster year for M&A activity, but price growth remained stagnant at 2% YOY since August.


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About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency marketing communications roles. He is responsible for Connect’s client content operations and is involved in a range of initiatives ranging from content strategy, message development, copywriting, media relations, social media and content marketing services. In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. In addition to his vast commercial real estate experience, Dennis has worked on communications and launch strategies for a number of residential projects such as Disney’s Celebration in Florida, Ritter Ranch in Palmdale California (7,200 homes, 22,000 acres), WaterColor in Florida and PremierGarage in Phoenix. Dennis’s agency background included firms such as Idea Hall and Macy + Associates. He has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. Dennis has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements. Dennis has been involved in a host of charitable and community organizations including the American Cancer Society, Easter Seals, BoyScouts, Chrysalis Foundation, Freedom For Life, HOLA, L.A.’s BEST, Reach Out and Read, Super Bowl Host Committee, and Thunderbirds Charities.

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