CCRSI RELEASE – SEPTEMBER 2012
(With data through July 2012)
Print Release (PDF)
This month's CoStar Commercial Repeat Sale Indices (CCRSI) provide the market's first look at July 2012 commercial real estate pricing. Based on 741 repeat sales in July and more than 100,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.
September 2012 CCRSI National Results Highlights
- COMMERCIAL PROPERTY PRICES NOTCH BIG YEAR-OVER-YEAR GAINS: Reflecting continued improvement in property market fundamentals, the two broadest measures of aggregate pricing for commercial properties within the CCRSI—the Equal-Weighted U.S. Composite Index and the Value-Weighted U.S. Composite Index—both posted substantial gains in July 2012. The Equal-Weighted Composite Index increased by 5.9% in July 2012 compared to one year earlier. Overall pricing reflected in this index is now up a cumulative 6.3% from the trough in March 2011. The Value-Weighted Composite Index found that U.S. commercial real estate prices surged by 11.3% over the same one-year period.
- VALUE-WEIGHTED INDEX REMAINS ROBUST: Strong growth in the Value-Weighted Composite Index indicates the highest-priced properties at the top end of the market continue to lead the recovery in commercial real estate pricing. This index has now increased 33% from the market trough in January 2010, but remains 18.4% below its peak in September 2007.
- GENERAL COMMERCIAL PROPERTY SECTOR CATCHING UP: While the investment-grade market segment has been responsible for the bulk of pricing gains to date, pricing in the broader market dominated by smaller, less expensive properties has made significant strides in recent months. The Equal-Weighted General Commercial Index increased by 1.6% in July 2012 and has accumulated a 3.9% gain since the beginning of 2012. At the same time, pricing in the Equal-Weighted Investment Grade Index held its own, rising 2.1% in July 2012, and increasing 5.2% from one year earlier despite the volatility seen in pricing of this segment early in the year.
- TIME-ON-MARKET CONTINUES TO DECLINE: Coinciding with the positive overall price movement evident in the CCRSI, sellers of commercial properties appear to be finding a more accommodating market in 2012. The average time on market for sold properties decreased by almost 2% since the end of the first quarter in 2012. Similarly, the gap between initial asking and final sales price narrowed by more than 2.5% since the beginning of 2012. Also, the decline in the number of properties withdrawn from the sales market by prospective sellers is another indication of improving investor sentiment. In July 2012, the number of properties withdrawn from the market declined 11.4% since the same period last year.
- DISTRESS LEVELS CONTINUE TO ABATE: Only 16% of observed trades in July were distressed, 20.6% lower than the peak level observed in March 2011.
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 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, 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 6.1 million registered members and 3.6 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.