by Wolf Richter
Tenants’ collapsing one after the other without replacement has a pernicious impact on property prices.
Before the coronavirus, some segments of commercial real estate (CRE) were red hot, others were hanging in there or declining, and one sector, malls, has been in deep trouble since 2016, with prices plunging. Then came the lockdowns. Property prices in every CRE segment fell in April, even those that were red hot. And prices of mall properties got crushed.
The overall Commercial Property Price Index (CPPI) by Green Street Advisors had peaked in the period of November 2019 through January 2020. In February and March, it ticked down. In April it plunged 9.4% from March, the second largest percent-drop in the data going back to the 1990s. The largest drop was 10.9% in October 2008, following the Lehman bankruptcy. Since the peak in January, the index has dropped 10.7% and is back where it had first been in May 2015: