From the August 7, 2013 Wall Street Journal:
The Commercial Property Price Index, produced by research firm Green Street Advisors, fell 1% between June and July…
The volatile apartment sector saw the biggest monthly decline, losing 3% of its value in the last month.
Despite the dip, apartment values remain 8% higher than their 2007 peak.
“There’s a tug of war right now, between healthy operating fundamentals and rising interest rates,” says Jim Sullivan, a managing director with Green Street.
“Occupancy is rising, rents are rising, owners are staying full.…It’s resulted in a bit of a stalemate in the direction of property values.”
Commercial-property values tend to fall when long-term interest rates rise partly because many landlords are unable to increase leasing rates fast enough to keep up with rising costs, including debt service, capital expenditures and maintenance costs.