US Property Deals Slumped, Price Growth Withered in Q4

Sales of U.S. commercial property fell 62% from a year prior in the fourth quarter of 2022, and annual price growth decelerated to the slowest rate of gain since 2011. Still, for the year in total, 2022 was the second-strongest year for sales on record, behind 2021.

Trading of properties such as offices, apartment buildings and warehouses slowed over 2022 as investment conditions became more uncertain. The surprising leader in investment sales for the year was the retail sector, showing a 4% year-over-year increase. Deal volume in the office sector fell the most across the major property types, dropping 25%.

Prices under pressure

Annual growth in property pricing slowed further in December. The RCA CPPI National All-Property Index rose just 0.9% from a year ago, and compared to November, prices fell 1.2%. Prices began to decline on a monthly basis in September.

The apartment sector showed the greatest deceleration in price growth in 2022. The annual growth rate slowed to 1.8% in December, down from annual rates greater than 20% seen through the first half of the year. Prices for apartment assets dropped 1.9% in December from November, the largest monthly price decline across the property sectors.