Commercial real estate prices to grow in central and southeastern U.S.
This is according to newly launched Moody’s Analytics forecasts of the Real Capital Analytics Commercial Property Price Indices (RCA CPPI).
The RCA CPPIs measure changes in commercial property prices nationally and across major US markets. Moody’s Analytics generates forecasts of the indices over a 30-year horizon to identify expected commercial property price trends under various economic scenarios.
According to the Moody’s Analytics outlook, commercial property markets are overvalued in New York, Boston, Oakland and San Francisco. Recent price gains have outstripped the growth in these economies’ underlying fundamentals, weighing on future property price appreciation.
In contrast, commercial real estate prices in Atlanta, Jacksonville, Ohio and Chicago are undervalued, and thus expected to rise more quickly in coming years. Markets are generally undervalued through the central and southeastern US.
The forecasts are available with Moody’s Analytics alternative economic scenarios, as well as the adverse and severely adverse scenarios set by the US Federal Reserve for stress-testing purposes.
Based on Moody’s Analytics robust economic models, the forecasts are informed by global economic conditions and the relationships among economic variables like employment, spending and production.
Moody’s Analytics forecasts of the RCA CPPI cover more than 200 indices that measure price changes for all major commercial property types in the US, including apartments, hotels, and industrial, business and retail offices, across 20 states, 10 regions and 31 markets. ■