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Pricing Improvements Signify ‘Virtuous Cycle’ Encouraging Lending, Capital Inflows
The equal-weighted and value-weighted U.S. Composite Indices posted solid monthly gains in April of 1.9% and 1.1%, respectively, as market fundamentals continued to improve across all the major CRE property types.
The value-weighted U.S. Composite Index, comprised of larger transactions, continued at a very strong year-over-year clip, gaining 10.8% in April. The equal-weighted composite, generally comprised of smaller and more numerous deals, rose 6.3% from the same period last year.
Within the equal-weighted U.S. Composite Index, the Investment Grade Index and General Commercial Index both made strong gains in April as the CRE pricing recovery rippled into more secondary property types and markets.
The investment grade segment surged by 4.1% in April, more than offsetting the first-quarter’s losses, and by 8.5% from a year ago. The index closed the month 1% above December 2012 pricing levels as office, retail and warehouse recorded the strongest gains, with the price recovery expands beyond the apartment sector.
Multifamily pricing, meanwhile, the first to rise emerging from the downturn, has stagnated in recent months as a result of rising new supply and near-peak pricing in primary markets.