U.S. commercial property fell 15% in 2008

Commercial real estate prices in the U.S. dropped by almost 15% in 2008, more than home prices, with fourth-quarter depreciation the greatest in the national apartment market, Moody’s Investors Service said Thursday.

The price decline eliminated the gains seen in 2006 and 2007 and returned values to 2005 levels, according to the Moody’s/REAL commercial property price indexes. Prices fell 2.2% in December from November, said New York-based Moody’s.

Commercial values are now down more than 16% from their peak in October 2007, Moody’s said. The deepening recession is causing tenants to cut jobs and vacate space, bringing down building incomes, while the credit freeze is making it difficult to finance purchases.

Commercial real estate prices fell more than home prices last year. The median price of a U.S. home declined 12% to $180,100 in the fourth quarter from a year earlier, and sales of properties with mortgages in default accounted for 45% of all transactions, according to the Chicago-based National Assn. of Realtors.

Apartment prices fell 11.5% in the fourth quarter, according to Moody’s. Even in the Western U.S., where prices held up better than the country as a whole, apartment prices fell 9% in the quarter and more than 16% for the year, Moody’s said.