Oct 28, 2016

CoStar Composite Price Indices Continue Moving Up in Third Quarter

Commercial Property Price Growth Accelerates In South and West Regions; Slower Growth Seen In Northeast and Midwest

(With data through SEPTEMBER 2016)

Print Release (PDF)

Complete CCRSI data set accompanying this release


WASHINGTON – This month's CoStar Commercial Repeat Sale Indices (CCRSI) provide the market's first look at September 2016 commercial real estate pricing. Based on 1,222 repeat sales in September 2016 and more than 167,000 repeat sales since 1996, the CCRSI report offers the broadest measure of commercial real estate repeat sales activity. 






CCRSI National Results Highlights

  • COMMERCIAL PROPERTY CONTINUED TO ENJOY BROAD-BASED PRICE GROWTH AS BOTH CCRSI COMPOSITE INDICES ADVANCED TO NEW HISTORICAL HIGHS IN SEPTEMBER 2016. Both of the CCRSI’s national composite price indices advanced by a healthy 2.9% in the third quarter of 2016.  The value-weighted U.S. Composite Index, which is influenced by the sale of higher-quality, larger assets, is now 26.4% above its prerecession peak, while the equal-weighted U.S. Composite Index, which reflects the more numerous sales of smaller properties, surpassed its prerecession high-water mark for the first time in September 2016, moving 0.8% above its August 2007 level. 

  • PRICE GROWTH IN EQUAL-WEIGHTED INDEX DRIVEN BY GENERAL COMMERCIAL SEGMENT. Within the equal-weighted U.S. Composite Index, the General Commercial segment, encompassing the smaller deals typical of secondary and tertiary markets, benefitted from improving fundamentals and higher yields to attract increased investment in this lower-end market segment. The General Commercial Index advanced 3.6% in the third quarter of 2016, pushing it 1% above its previous peak. The Investment-Grade Index, by contrast, which led the recovery in property prices following the recession and reached its pre-recession high earlier in 2016, posted a modest decline of 1.5% in the third quarter of 2016. 

  • SALES VOLUME HAS CONTINUED TO LEVEL OFF. Total investment sales volume of $90.7 billion in the first three quarters of 2016 was 1.5% lower than the first three quarters of 2015 as capital flows decelerated from last year’s record-setting levels. 

  • MULTIFAMILY LED GROWTH AMONG MAJOR PROPERTY SECTORS IN THIRD QUARTER. Despite already high pricing and rising levels of construction in the multifamily sector, the U.S. Multifamily Index continued to reflect strong price growth, advancing 2.2% in the third quarter of 2016, the strongest quarterly growth rate among all major property type indices. However, a modest decline in the Prime Multifamily Metros index in the third quarter suggests a maturing cycle for the priciest multifamily markets. 


  • PRICE GROWTH ACCELERATED IN WEST AND SOUTH REGIONS. Price growth of 2.2% and 2.1% in the West and South regions respectively was the strongest quarterly growth of the year so far in 2016, handily outpacing the Northeast and Midwest composite indices. 


Quarterly CCRSI Property Type Results

  • PRICING GAINS ACCUMULATED ACROSS ALL FOUR MAJOR PROPERTY SECTORS DURING THIRD QUARTER 2016. While the multifamily sector once again led pricing growth, all four major property type indices posted positive growth in the third quarter of 2016, contributing to solid annual gains. The Prime Markets Indices within each property sector—dominated by the large, core, coastal metros—generally increased more slowly than the national property type indices in the third quarter of 2016, suggesting the pricing recovery has become more broad-based.

  • MULTIFAMILY INDEX GROWTH REMAINED ROBUST DESPITE WEAKNESS IN PRICING AT TOP OF THE MARKET.  The U.S. Multifamily Index expanded 2.2% in the third quarter of 2016 and 7.7% in the 12-month period ending in September 2016, the strongest three-month and 12-month rates among the four major property indices. The Multifamily Index ended the third quarter of 2016 25% higher than its previous high level in 2007. The recent movement of the Prime Multifamily Metros Index, however, suggests a maturing cycle for the priciest markets and properties. The Prime Multifamily Metros Index receded 2.4% in the third quarter of 2016, its first decline since 2010, but still remains 45% above 2007 levels.

  • OFFICE INDEX SAW STEADY GAINS. The U.S. Office Index increased 1.6% in the third quarter of 2016 and 6.5% in the 12-month period ending in September 2016, as office rent growth and occupancy rates nationally have continued to improve. Similar to the trend seen in multifamily, price growth was slower at the top end of the office market as well. The Prime Office Metros Index advanced by a more modest 0.6% in the third quarter of 2016. This may be reflective of a slowdown in net absorption in the tech-driven prime office markets of San Francisco and San Jose in the third quarter.  

  • HEALTHY FUNDAMENTALS SUPPORTED SOLID GROWTH IN U.S. INDUSTRIAL INDEX. The U.S. industrial market posted its second-strongest quarter of net absorption on record in the third quarter of 2016, which helped to push vacancies lower than at any time in the last two cycles. Reflecting this performance, the U.S. Industrial index advanced 1.8% in the third quarter of 2016 and 5.5% in the 12-month period ending in September 2016. Core industrial markets remained in favor among investors as the Prime Industrial Metros Index advanced by 2.6% in the third quarter of 2016 and 9.2% in the 12-month period ending in September 2016.  

  • DECLINE IN PRIME RETAIL METROS INDEX IN THIRD QUARTER WEIGHED ON U.S. RETAIL INDEX GROWTH. The broad U.S. Retail index rose a modest 0.1% in the third quarter of 2016 contributing to an annual gain of 4.1% in the 12-month period ending in September 2016. Here again, the slowdown in overall pricing growth was attributable to a flattening in prices at the top end of the market. The Prime Retail Metros Index had advanced 20% above its prior peak level in the second quarter of 2016, but dipped 1.9% in the third quarter of 2016, reflecting a slowdown in price growth among the most expensive properties and metros that previously led the recovery.

  • DESPITE WEAK THIRD QUARTER, U.S. HOSPITALITY INDEX POSTED DOUBLE-DIGIT GAINS FOR 12 MONTHS ENDING IN SEPTEMBER.  The U.S. Hospitality Index fell 1% in the third quarter of 2016 but was the only property type index to post double-digit annualized growth through September 2016. National hotel occupancies remain well above last cycle’s highs, which has supported room rate and RevPAR growth as well as investor demand.

  • STRONG DEMAND FOR DEVELOPMENT SITES FUELED GROWTH IN U.S. LAND INDEX. The Land index advanced 0.3% in the third quarter of 2016 and 6.2% in the 12-month period ending in September 2016. The Land Index, which did not reach its trough until very late in the cycle in 2012, remains 13.5% below its previous peak. 

Quarterly CCRSI Regional Results

  • WEST REGION GETS BOOST FROM MULTIFAMILY AND INDUSTRIAL INDICES. After advancing 2.2% in the third quarter of 2016 and 6.5% in the 12-month period ending in September 2016, CCRSI’s West Composite Index has now surpassed its peak in the last cycle by 2.8% to become the second regional index to exceed its prerecession high, joining the Northeast. The West Multifamily Index has been the engine of growth for the region, expanding by 1.8% in the third quarter and 8.5% in the 12-month period ending in September 2016, the strongest annual growth rate of all 16 regional property type indices. The West Industrial Index also advanced 1.8% in the third quarter, pushing it past its prior peak level by 0.1%.

  • SOUTH REGION ALSO BENEFITS FROM STRONG GROWTH IN MULTIFAMILY INDEX. The South Composite Index increased 2.1% in the third quarter of 2016 and 6.5% in the 12-month period ending in September 2016. Similar to commercial property pricing trends in the West region, the South Multifamily Index led pricing growth in the South region, expanding 1.8% in the third quarter of 2016 and 7.7% in the 12-month period ended in September 2016. Growth in the South Multifamily Index has been particularly strong, surpassing its prerecession peak by 10.1% in September 2016 after seeing the steepest peak-to-trough decline (43.5%) of any property type index in the region during the last downturn. 

  •  NORTHEAST REGIONAL INDEX GROWTH MODERATES. The Northeast region’s strong concentration of large, high population markets, which have been a magnet for investment since early in the current cycle, helped push all four regional indices past prior peak levels to new historical highs. However, Northeast Composite Index growth of 0.5% in the third quarter of 2016 was the slowest posted by the region since 2013. The Northeast Multifamily and Industrial Indices fell slightly in the third quarter of 2016, while the Northeast Office and Retail indices each expanded by 1.8%. The slowdown in price growth mirrors a maturing cycle for market fundamentals for many of the top-tier markets included in the Northeast region. 

  • MIDWEST REGION CONTINUED TO LAG BEHIND IN RECOVERY. The Midwest Composite Index fell 2.1% in the third quarter of 2016, which contributed to a modest annual gain of just 1% for the 12-month period ending in September 2016.  The Midwest Office Index was the best performer in the region, expanding by 2.4% in the third quarter, the strongest quarterly growth of all 16 regional property type indices.  However, the regional index was dragged down by declines in the Midwest Industrial and Midwest Retail Indices.  

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.




Gay Beach, Senior Director, Marketing Communications, CoStar Group (

For more information about the CCRSI Indices, including the full accompanying data set, research methodology, legal notices and disclaimer, please visit

About CoStar Group, Inc.

CoStar Group, Inc. (NASDAQ: 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 million registered members., and 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 Corporation, is the exclusive provider of apartment community listings across Move's family of websites, which include®, and  CoStar Group's websites attracted an average of nearly 25 million unique monthly visitors in aggregate in the third quarter of 2016. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of approximately 2,800 worldwide, including the industry's largest professional research organization. For more information, visit          


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 trends related to healthy commercial real estate fundamentals, pricing recovery, and slowdowns in price growth in certain sectors, as well as indications of maturing cycles for the priciest markets and properties; the possibility that the U.S. business cycle is not as stated in the release; and the risk that transaction activity, investor demand, market supply, absorption and commercial real estate pricing levels and growth will not continue at the levels or with the trends indicated in this release. More information about potential factors that could cause results to differ materially from those anticipated 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, 2015, and CoStar’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar’s other filings with the SEC available at the SEC’s website ( All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.