Commercial and multifamily market activity downshifted at the start of this year, according to the Mortgage Bankers Association. “Markets continue to move forward, but the rapid increases in property values, transaction volumes and other fundamentals that characterized the post-recession period have given way to more regular changes tied to the economy as well as changes in supply and demand,” according to the association’s quarterly DataBook report.

Commercial real estate fundamentals generally improved during the first quarter, with most vacancy rates trending down and rents trending up, the report says. Retail vacancy rates fell to 9.8 percent, from 9.9 percent a year earlier, and average rents rose by 1.6 percent year over year.

New construction activity continued at a strong clip, much of it in the multifamily sector, says the report.

Commercial and multifamily property sales activity began the year slowly, with first-quarter sales of major property types down by 19 percent relative to the comparable quarter a year ago.

Property price growth has slowed, with different indices providing different results. The National Council of Real Estate Investment Fiduciaries property price index started this year with a slight decline, falling by 1.7 percent in the first three months, while the Moody’s/RCA commercial property price index increased by 0.7 percent. The Green Street Advisors CPPI, which tracks values among properties owned by REITs, fell by 0.4 percent during the period.

Retail property capitalization rates were at 6.6 percent in the first quarter, versus 5.4 percent for apartments and 7 percent for industrial properties, the DataBook reports.

And investors put about the same amount into commercial properties in the first quarter of 2017 as they did a year ago. The difference is that more of it is allocated away from retail properties and into multifamily and industrial properties.

The first quarter saw a 40 percent year-over-year increase in the dollar volume of loans for industrial properties, a 22 percent increase for health care properties, a 14 percent climb for multifamily properties, a 2 percent rise for office properties, a 23 percent decrease in retail property loans and a 40 percent decrease in hotel property loans.

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