APRIL 2012 CCRSI RELEASE
(With data through February 2012)
Print Release (PDF)
This month's CoStar Commercial Repeat-Sale Indices (CCRSI) provide the market's first look at February 2012 commercial real estate pricing. Based on 704 repeat sales of commercial property in February and more than 100,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity. Also, in this release CoStar provides a closer look at the impact of real estate fundamentals on two different segments of the market.
February 2012 National Results Highlights
- The U.S. Composite Index declined by 1.3% in February 2012 due to a dip in investment-grade pricing. Reflecting the February decline, the U.S. Composite Index remained 33.6% below its prerecession peak but 4.0% above the same period last year.
- In contrast to the monthly pricing decline in the Composite Index, the U.S. General Commercial Index was flat in February. This segment has shown more consistency and better performance than the Composite Index over the last 12 months. Since the beginning of the year, the General Commercial Index has advanced by 1.7% while the Composite Index remains unchanged.
- Consistent with seasonal patterns of recent years, the U.S. Investment Grade Index gave back a sizeable portion of last year’s gains in the first two months of 2012. The Investment Grade Index declined by 6.6% in February 2012, similar to the 5.6% contraction recorded for the same index in February 2011. This pricing reversal coincides with a seasonal slowdown in investment grade transaction activity, a trend observed in the first two months of each of the past three years. Despite the weak performance in February 2012, investment grade property prices have increased by 11.5% since their trough in late-2009 and still outperformed general commercial property prices.
- The relative performance of the General Commercial and Investment Grade indices is closely related to market fundamentals. Net absorption for the three major property types – office, retail, and industrial – has been positive in both market segments over the past eight quarters. However, for the greater part of two years, absorption has been stronger in the investment grade sector. It was not until recently that the general commercial properties moved ahead in demand growth, whereas the relative contribution of the higher end of the market to net absorption has diminished. (Please refer to the Market Fundamentals chart included in this month’s release.) This in part explains the slower but more stable pricing growth in the General Commercial Index since the start of 2011. The increase in absorption among General Commercial properties also shows that the recovery is becoming more broad-based and therefore more stable and lasting.
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, 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 10 largest metropolitan 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 CCRSI Indices, including our legal notices and disclaimer, please visit http://www.costar.com/ccrsi.
About CoStar Group, Inc.
CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of information and analytic 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. Headquartered in Washington, D.C., CoStar maintains offices throughout the U.S. and in Europe with a staff of approximately 1,500 worldwide, including the industry's largest professional research organization. For more information, visit http://www.costar.com.