Rating Agencies Expect CRE Price Decline.

New York -- Two credit rating agencies report that commercial real estate indices they maintain point to a decline in commercial real estate prices.

Standard & Poor's said that October results on its S&P/GRA commercial real estate indices show that "annual returns continue to decelerate" on a national level.

The national composite index showed annual returns of 4.9%, compared to October 2006. However, this is a decline from the growth rates seen previously, according to the rating agency.

David Blitzer, managing director and chair of the index committee at S&P, noted, "There may be pockets of relative strength in certain regions. The Desert Mountain West, the Mid-Atlantic South and the Northeast all reported some improvement in their annual returns. However, these regions are still significantly below their recent double-digit growth rates, so we will need to keep an eye out to see if the decelerating trend continues in future months."

In terms of property sectors, the apartment sector gained 2% in October, compared to September 2007, but was down 0.5% compared to October 2006. This is the worst performing property sector on an annual basis.

"A few more months of data are needed to tell whether this sector is turning around or on its way to further declines," according to Mr. Blitzer.

Office properties performed best, with an annual return of 10.8%, but monthly returns were down 2.5% in October 2007, compared to September.