Tuesday, May 10, 2011
NEW YORK, NY—May 10, 2011—The hospitality/lodging market, which experienced the greatest decline in 2010, has the second-best growth prospects after the multifamily sector, according to Integra Realty Resources’ (Integra) 1Q 2011 Commercial Property Index.
While this quarter’s survey shows that lodging properties (-1 percent) experienced the greatest decline in value over the past 12 months, the sector is expected to increase 2 percent in the coming six months.
This survey uses Integra’s extensive national database and a polling system to determine the rate of change in property values across the country and in all property types, including multifamily, lodging, industrial, retail, and office. Integra is North America’s largest independent commercial real estate consulting firm that specializes in the valuation of commercial real estate.
“Multifamily properties continue to show the greatest strength in virtually all regions, most notably in the East,” said Jeffrey Rogers (top right photo), President and COO of Integra Realty Resources.
“In the past year alone, the multifamily sector has seen a 12 percent increase in property values. The values of other property types have stabilized over the past quarter and are expected to grow at a modest pace over the next six months. When comparing regions across all sectors, the East continues to outpace other parts of the United States.”
After lodging, the remaining sectors increased in value over the past year, with office having the smallest increase (0.25 percent) and multifamily experiencing the largest increase (7 percent).
In the next six months, all commercial property sectors should increase in value, with the exception of Southern office and retail, which will stabilize in value. When comparing the regions’ performances in the first quarter, the East has surpassed last quarter’s Western region as the best performing region.
The East’s multifamily sector increased 5 percent in value; its retail sector experienced a 3 percent gain; its office and lodging sectors saw a 2 percent increase; and its industrial sector increased 1 percent.
Western lodging was the only sector to decrease in value (-1 percent) in the previous quarter. Other sectors were stable throughout Q1, including Central’s retail, industrial, multifamily, and lodging sectors; the South’s office, retail, lodging and industrial sectors; and the West’s industrial sector.
In the next six months, property values are expected to increase or stabilize across the country. In the East, multifamily properties will increase 4 percent; office will increase 3 percent; retail and lodging will increase 2 percent; and industrial will increase 1 percent.
In the Western region of the country, all industry sectors are also increasing in value. Western multifamily is expected to increase 3 percent in value; lodging is expected to increase 2 percent in value; and the office, retail, and industrial sectors are expected to increase 1 percent in value.
The Central region shows multifamily increasing 2 percent in value and the remaining sectors increasing 1 percent in value. Southern multifamily and lodging sectors will increase 2 percent; the industrial sector will increase 1 percent; and the region’s office and retail sectors will stabilize.
The Integra survey also shows that all geographic regions have entered a recovery market cycle. When analyzing Integra’s 1Q assignments, the Eastern (29 percent) and Western (34 percent) regions have the lowest amounts of assignments classified as distressed assets.
The Southern region follows closely behind with 39 percent of assignments classified as distressed assets. The Central region of the country is faring a bit worse, with 52 percent of the assignments comprised of distressed assets.
Other charts and localized data are available upon request.
For more information, please contact Leigh Sperun at Leigh@GregoryFCA.com or at 610-228-2108.