Print Release (pdf)
National Composite Monthly Indices
- Investment grade real estate continued to slide in July by a negative 5.05% following a similar dip in June. Cumulatively that is a drop of nearly 10% in just two months, following an extremely positive 11.78% increase in May and nearly wiping out the May increase.
- As a result, the three month change in the investment grade index ending July 31, 2010 was a slightly positive 1.01%.
- For comparison purposes we note that the Moody’s REAL Commercial Property Price Indices (CPPI) declined in June by 4.0% not too far off of our investment grade index for June. The Moody’s REAL CPPI for July will come out in a month or so, and it will be interesting to see if it continues to follow the CoStar CCRSI for investment grade.
- The past 12 month change in the investment grade index was -14.34% which seems huge but is far better than the minus 20% to 33% annual declines witnessed from April of 2009 through April of 2010.
- On the positive side general commercial real estate and therefore the CoStar composite index for all commercial real estate continued to show improvement with a plus 6.41% for general commercial and plus 5.665 for the composite for the month of July. This suggests interest in second tier and third tier markets and smaller scaled properties is picking up and/or finally able to find some financing and close. The general composite index remains down by nearly 6% from a year ago but again, this is far better than observed during the previous 12 months.
- Sales transaction dollar volumes picked up for all property types during the second quarter of 2010 with significant increases in the office sector as well as multifamily. Industrial volumes and retail remain low but also showed some increase in activity. Generally an increase in transaction volumes indicates a positive movement in prices, however, a significant proportion of distressed sales will add both volatility and noise to these indices and right now all we can say is that we are approaching a shaky bottom.
- The most active buyers have been REITs, public and private, followed by developer/owners and individuals as well as investment managers including some hedge funds.
- Overall distressed sales are still increasing and yet as a percent of sales, as shown below, they appear to be peaking but we should note that overall volumes are also picking up.
- Distressed sales in the second quarter of 2010, again as a percent of transaction volume, are highest for hospitality at 35%, followed by multifamily at 28%, office at 21%, retail at 18% and industrial at about 17%.
Comparison Table for Current Release
COMMENTARY ON DATA
The CCRSI July report is based on data through the end of June. In June, 665 sales pairs were recorded, up significantly from May, during which 506 transactions occurred. Overall, there has been an upward trend in pair volume going back to 2009. February 2009 appears to have been the low point in the downturn in terms of pair volume, when 374 transactions were recorded. Since then pair volume has increased overall, and beginning in November 2009, year-over-year changes in pair volume have been positive every single month. In terms of the mix of pairs that have sold, June saw an increase in the proportion of repeat investment grade properties trading hands. Investment grade sales amounted to 31% of the total number of sales in June, the highest level it has been going back to January 2008. This indicates an increased mix of larger properties changing hands, which had been at decreased levels since the beginning of the recession. Prior to June, 24% of sales pairs in 2010 were considered investment grade. This compares to an average of 33% of sales pairs being investment grade in 2006 and 2007, before the start of the downturn. Distress is also a factor in the mix of properties being traded. Since 2007, the ratio of distressed sales to overall sales has gone from around 1% to above 23% currently. Hospitality properties are seeing the highest ratio, with 35% of all sales occurring being distressed. Multifamily properties are seeing the next highest level of distress at 28%, followed by office properties at 21%, retail properties at 18%, and industrial properties at 17%.s
Number of Repeat Sale Transactions
Distressed Transactions as % of All Transactions
Distressed by Property Type
National Property Type Quarterly Indices Through June of 2010
U.S. Regional Quarterly Indices Through June of 2010
Office Top 10 Metros Quarterly Indices
Industrial Top 10 Metros Quarterly Indices
Retail Top 10 Metros Quarterly Indices
Multifamily Top 10 Metros Quarterly Indices
U.S. West Property Type Quarterly Indices
U.S. South Property Type Quarterly Indices
U.S. Midwest Property Type Quarterly Indices
U.S. Northeast Property Type Quarterly Indices
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