Jan 27, 2016
Composite Price Indices for Commercial Real Estate Soared in 2015
Double-Digit Price Growth Across All Regional and Property - Type Indices in 2015 Locks in Recovery
Double-digit Price Growth Across All Regional and Property - Type Indices in 2015 Locks in Recovery
CCRSI RELEASE – JANUARY 2016
(With data through December 2015)
WASHINGTON – January 27, 2016: This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at December 2015 commercial real estate pricing. Based on 1,496 repeat sales in December 2015 and more than 150,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.
CCRSI National Results Highlights
- CCRSI COMPOSITE PRICE INDICES SOARED IN 2015. Improving CRE fundamentals, surging investor demand and liquid capital markets propelled the CCRSI composite indices upward in 2015. Demand for core property assets was especially strong. The value-weighted U.S. Composite Index rose 12.5% in 2015 to an all-time high that is 19.1% above its prerecession peak.
- PRICING IN NON-PRIMARY MARKETS MADE SIGNIFICANT ADVANCMENTS. While pricing in core markets set records in 2015, investors moving out on the risk spectrum in search of higher yields resulted in equally strong sales activity in non-core markets and property types, as reflected in the equal-weighted U.S. Composite index. Heavily influenced by lower-value properties typical of those in secondary and tertiary markets, the equal-weighted U.S. Composite Index rose 12.6% in 2015 and is now within 3.4% of its previous high water mark.
- GENERAL COMMERCIAL INDEX LED GROWTH IN EQUAL-WEIGHTED INDEX. Mirroring pricing trends in the broader U.S. composite indices, the General Commercial segment of CCRSI’s Equal-Weighted Index, which reflects sales of smaller, lower-value properties, grew by 13.2% in 2015 and is now within 4% of its prior peak. The Investment-Grade segment of CCRSI’s Equal-Weighted Index has essentially fully recovered. After gaining 10.4% in 2015, the Investment-Grade Index is within 0.2% of its prior peak level.
- DOUBLE-DIGIT INCREASES IN FOUR MAIN REGIONAL AND SIX PROPERTY-TYPE INDICES IN 2015 CONFIRM BROAD-BASED RECOVERY. All six major property-type indices, including the land and hospitality indices, along with CCRSI’s four regional indices, posted double-digit gains in 2015, marking the second straight calendar year in the recovery in which all indices increased at double-digit rates.
- NORTHEAST MULTIFAMILY INDEX WAS BEST-PERFORMING REGIONAL PROPERTY SEGMENT IN 2015. The Northeast Multifamily Index increased 15.4% in 2015 to 44% above its 2007 high. The West Multifamily and West Office Indices also posted exceptionally strong growth during 2015 of 14.8% and 13.9%, respectively, propelling the broader West Regional Index to within 1% of its prior peak. The South and Midwest Indices grew by 12% and 10%, respectively, in 2015 but both remained 10% or more below their prior peak levels.
- DECEMBER TRANSACTION VOLUME CONTRIBUTED TO NEW RECORD HIGH IN 2015. In a repeat of the seasonal pattern witnessed over the last several years, transaction activity spiked in the final month of the year as investors rushed to close property transactions prior to year-end. December composite pair volume of nearly $18 billion was the highest monthly total on record for the CCRSI and helped lift total volume for 2015 to $128.3 billion. This marked a 26.2% increase from the previous calendar year peak reached in 2014.
Quarterly CCRSI Property-Type Results
About the CoStar Commercial Repeat-Sale Indices
The CoStar Commercial Repeat-Sale Indices (CCRSI) is the most comprehensive and accurate measure 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.
Keosha Burns, Director of Public Relations, CoStar Group (firstname.lastname@example.org).
For more information about the CCRSI Indices, including the full accompanying data set and research methodology, legal notices and disclaimer, please visit http://www.costargroup.com/costar-news/ccrsi.
About CoStar Group, Inc.
CoStar Group, Inc. (CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. 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. LoopNet is the most heavily trafficked commercial real estate marketplace online with more than 10.0 million registered members. Apartments.com, ApartmentFinder.com and ApartmentHomeLiving.com currently form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Through an exclusive partnership with Move, a subsidiary of News Corp (NWS) (NWSA) (NWS) (ASX:NWSLV), Apartments.com is the exclusive provider of apartment community listings across Move’s family of websites, which include realtor.com®, doorsteps.com and move.com. CoStar Group operates websites with over 23.7 million unique monthly visitors in aggregate as of September 2015. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Toronto with a staff of approximately 2,850 worldwide, including the industry’s largest professional research organization. For more information, visit www.costargroup.com.
This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's expectations, beliefs, intentions or strategies regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends represented or implied by the indices will not continue or produce the results suggested by such trends, including the seasonal pattern of spiked transaction activity in the final month of the year, growth rates, and healthy and improving market fundamentals; and the risk that investor risk tolerance, investor demand, market supply, vacancy rates, absorption and commercial real estate pricing levels will not continue at the levels or with the trends indicated in this release. More information about potential factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, those stated in CoStar's filings from time to time with the Securities and Exchange Commission, including in CoStar's Annual Report on Form 10-K for the year ended December 31, 2014, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, as well as the company's other filings with the SEC available at the SEC's website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements, whether as a result of new information, future events or otherwise.