CCRSI RELEASE – January 2013
(With data through November 2012)
Print Release (PDF)
This month's CoStar Commercial Repeat Sale Indices (CCRSI) provide the market's first look at November 2012 commercial real estate pricing. Based on 929 repeat sales in November 2012 and more than 100,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.
November 2012 CCRSI National Results Highlights
- NOVEMBER PRICES SEE MEASURED IMPROVEMENT: With the uncertainty surrounding the U.S. elections in investors’ rear view mirror, commercial real estate prices notched modest gains in November. The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index—advanced by 0.9% and 1.1%, respectively.
- VALUE-WEIGHTED INDEX HITS HIGHEST LEVEL SINCE 2009: The U.S. Value-Weighted Composite Index, which weights each repeat-sale by transaction size or value (and therefore is heavily influenced by larger transactions), rose 6.2% over the last year and has now increased 38% from its pricing trough in 2010. Strong improvement in this index reflects sturdy investor demand for core markets and assets that have been at the forefront of the pricing recovery for commercial property.
- WITHIN THE EQUAL-WEIGHTED INDEX, THE GENERAL COMMERCIAL SEGMENT ACHIEVES HEALTHY GAINS OVER PREVIOUS YEAR: The Equal-Weighted index weights each repeat-sale equally and therefore reflects the influence of smaller transactions. While pricing in the General Commercial segment bottomed much later than the Investment Grade segment, the General Commercial Index has made strong gains over the last year and is now up nearly 10% from its nadir in the first quarter of 2011. Recent gains suggest investors are increasingly branching out to second-tier markets and assets, as prices for premium assets in top markets have become extremely competitive. The decline in the Investment Grade Index, on the other hand, is mainly a correction of a seasonal surge in sales activity in prior months.
- ABSORPTION GETS BACK ON TRACK: Aggregate net absorption of available space for three major property types—office, retail, and industrial—picked up in the fourth quarter after a lackluster turn in the third quarter. The rise in leasing activity stems from healthy absorption in both the General Commercial and the Investment Grade segments, indicating a broader and more sustained real estate recovery.
- DISTRESS SALES DECLINE WITH IMPROVING FUNDAMENTALS: The percentage of commercial property selling at distressed prices slid to 14.5% in November 2012, the lowest rate since mid-2009.
About the CoStar Commercial Repeat-Sale Indices
The CoStar Commercial Repeat-Sale Indices (CCRSI) are the most comprehensive and accurate measures of commercial real estate prices in the United States. In addition to the national Composite Index (presented in both equal-weighted and value-weighted versions), national Investment Grade Index and national General Commercial Index, which we report monthly, we report quarterly on 30 sub-indices in the CoStar index family. The sub-indices include breakdowns by property sector (office, industrial, retail, multifamily, hospitality and land), by region of the country (Northeast, South, Midwest, West), by transaction size and quality (general commercial, investment grade), and by market size (composite index of the prime market areas in the country).
The CoStar indices are constructed using a repeat sales methodology, widely considered the most accurate measure of price changes for real estate. This methodology measures the movement in the prices of commercial properties by collecting data on actual transaction prices. When a property is sold more than one time, a sales pair is created. The prices from the first and second sales are then used to calculate price movement for the property. The aggregated price changes from all of the sales pairs are used to create a price index.
For more information about the CCRSI Indices, including a detailed methodology, fact sheet, legal notices and disclaimer, and an archive of previous releases, please visit http://www.costar.com/ccrsi.
About CoStar Group, Inc.
CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of information, analytics and marketing services. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. Through LoopNet, the Company operates the most heavily trafficked commercial real estate marketplace online with more than 6.5 million registered members and 3.5 million unique monthly visitors. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe, including the industry's largest professional research organization. For more information, visit http://www.costar.com.