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Hotel prices fall and CRE sector performance diverges in June
MSCI said hotel prices dropped 9.3% year over year, while suburban offices rose 3.0%, and transaction volume reached $136.6 billion.
Commercial real estate pricing continued to diverge by property type in June, with hotel values falling while suburban offices were the top performer, according to MSCI’s monthly sales report cited by Bisnow.
Hotel prices declined 9.3% year over year in June, apartment values slid 1.7%, and industrial properties fell 0.4% for the first negative reading in the cycle. Retail prices were essentially flat, while suburban offices gained 3.0% from the prior year.
MSCI analysts said sectors are not moving “in unison” this cycle, with property types priced based on their own fundamentals rather than as a single asset class driven by broader financial moves.
Transaction volume totaled $136.6 billion in June, up 14% year over year, with overall prices drifting upward by about 90 basis points. Portfolio sales, which made up a quarter of activity, rose 38% on the year versus a 4% increase in single-asset deals, and MSCI Chief Economist Jim Costello said broader historical trends suggest a weaker deal trend in the second half of the year, though not a collapsing market.