Commercial real estate drops most in 25 years

MIT News – MIT commercial property price index posts record drop:

The 18.1 percent drop in the transactions-based index (TBI) for the second quarter is by far the biggest quarterly decline in the gauge’s 25-year history. (The second-biggest down quarter was the fourth quarter of last year, at -10.6 percent.) This was the fifth consecutive quarterly drop and the seventh in the past eight quarters. The index is now down 22 percent year-to-date, down 32 percent from where it was a year ago and down 39 percent from its mid-2007 peak — far greater in nominal terms than the 27 percent drop the index experienced in the previous major commercial property downturn in the late 1980s and early 1990s (the two drops are now tied in real terms, net of inflation, at 41 percent), and substantially greater than the current drop in national housing prices (about 30 percent).