Commercial property prices in the US fell to a post-recession low during March, with sales of financially-distressed assets having a negative impact on the market.
Moody's Investors Service revealed that its commercial Property Price Index dropped 4.2 percent from February and is now 47 percent below the peak of October 2007. It is the fourth consecutive month that the index has fallen, the firm added.
Investor demand is strongest for well-leased buildings in such major markets as New York and Washington as vacancy rates decline and the economy grows.
"[The index] continues to bounce along the bottom as a large share of distressed transactions preclude a meaningful recovery of overall market prices," Tad Philipp, Moody's director of commercial real estate research, said. "Indeed, the post-peak low in price has been reached in the same period as a post-peak high in distressed transactions has been recorded."
Meanwhile, Moody's noted that almost a third of all March transactions were of distressed assets, meaning the properties' owners faced foreclosure. It was the largest proportion of distressed property sales in the history of the index.