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Prices for commercial property keep going up

People who recently sold commercial property in California may have significantly profited from their initial investment, depending on when the property was purchased. The most recent report from Moody's/RCA Commercial Property Price Indices shows that commercial real estate prices have continued to climb. Commercial property prices went up by 0.7 percent in July and 2.8 percent in the three-month period ending July 31.

Prices for certain types of commercial real estate rose more than others during July. Retail properties saw the highest price growth, at 1.7 percent. Prices for apartment buildings went up by 1 percent, and prices for office properties went up by 0.2 percent. Although prices for industrial commercial properties fell by 0.1 percent during the three-month period ending July 31, these property prices increased by 10.5 percent over a 12-month period, which was the lowest growth rate for any type of commercial real estate.

The report from Moody's/RCA also included information about when the best holding periods occurred for commercial real estate investors. According to Moody's/RCA, investors who bought properties in May 2010 and then sold the properties in May 2015 probably received the best returns on their investments. During that period of time, the all-property index rose by 80.8 percent. The all-property index fell by 35.9 percent between May 2007 and May 2010, making that holding period the worst for commercial real estate investments.

Before buying or selling commercial real estate, it is important for investors to understand real estate market fluctuations and what factors are affecting them. An attorney with experience in this area may be able to advise an investor about specific commercial real estate transactions and review the applicable documentation for a particular deal.

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