STAMFORD, Conn.–(BUSINESS WIRE)–Prices for small commercial properties are gradually recovering after a slump lasting three years. According to the Small-Cap Price Index from research firm Boxwood Means, Inc., prices for small commercial real estate properties under $5 million rose in October for the fourth consecutive month to 90.2. This figure represents a 41 basis-point increase over the previous month and a 2.2% gain over the last three as private investors and entrepreneurs anticipate a space market recovery in 2011.
The uptrend is particularly auspicious for U.S. commercial banks, many of which are saddled with distressed or nonperforming loans that are currently held in portfolio. “Clearly, bid-ask spreads are tightening,” said Boxwood principal Randy Fuchs “and after substantial write-downs this year many banks are in a much better position to unload loan assets in the months ahead as market prices approach carrying values.” Commercial banks hold an estimated $1.5 Trillion of CRE mortgage assets with the large majority comprised of small-balance commercial and business real estate loans.