CCRSI RELEASE – OCTOBER 2012
(With data through AUGUST 2012)
Print Release (PDF)
This month's CoStar Commercial Repeat Sale Indices (CCRSI) provide the market's first look at August 2012 commercial real estate pricing. Based on 878 repeat sales in August 2012 and more than 100,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.
October 2012 CCRSI National Results Highlights
- PRICE RECOVERY ACCELERATES ACROSS THE BOARD: The two broadest measures of aggregate pricing for commercial properties within the CCRSI — the U.S. Value-Weighted Composite Index and the U.S. Equal-Weighted Composite Index — each posted significant gains in August 2012. The two components of the equal-weighted U.S. Composite Index (Investment Grade and General Commercial) both advanced in August, signifying that the recovery in property pricing has reached across all size and quality dimensions of the commercial real estate sector.
- VALUE-WEIGHTED INDEX REACHES HIGHEST MARK IN 3+ YEARS: 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, reached its highest level since early 2009. It has now improved by a cumulative 34.1% since the start of 2010, reflecting strong investor demand for primary gateway metro areas and institutional-grade multifamily assets that have been at the forefront of the pricing recovery for commercial property.
- EQUAL-WEIGHTED INDEX POSTS BIGGEST GAIN IN SIX YEARS: The rate of improvement in the U.S. Equal-Weighted Composite Index, which weights each repeat-sale equally and therefore reflects the influence of the more numerous smaller transactions, has accelerated. The 7.6% year-over–year increase of the Equal-Weighted Composite Index in August 2012 was the largest such gain since August 2006. Despite the increase, cumulative gains in the Equal-Weighted Index have lagged behind those in the Value-Weighted Index, reflecting a slower rate of recovery of tenant demand in the General Commercial segment.
- PRICING UNCERTAINTY LOOMS AS ABSORPTION PULLS BACK: Aggregate net absorption of available space for three major property types—office, retail, and industrial—slowed during the third quarter of 2012 to less than one third of levels in the second quarter of 2012 and less than half of that in the first quarter of this year. The slowdown in leasing activity stems mainly from negative absorption in the General Commercial segment. Should this drawback in tenant demand be sustained by further macroeconomic weakness, near-term transaction volume and pricing could suffer.
- DISTRESS SALES CONTINUE TO DECLINE: The percentage of commercial property selling at distressed prices in August 2012 was the lowest 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 the same property is sold more than once, 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.