CCRSI RELEASE – JULY 2012
(With data through MAY 2012)
Print Release (PDF)
This month's CoStar Commercial Repeat Sale Indices (CCRSI) provide the market's first look at May 2012 commercial real estate pricing. Based on 853 repeat sales in May 2012 and more than 100,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.
July 2012 CCRSI National Results Highlights
- PRICING GAINS SEEN 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 positive gains in May 2012 over year-ago levels. Both components of the equal-weighted U.S. Composite Index (Investment Grade and General Commercial) likewise posted year-over-year growth, an indication that the recovery in property pricing is reaching 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 is therefore heavily influenced by larger transactions, reached its highest level since early 2009. It has now improved by a cumulative 36.1% 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 PERFORMANCE IMPROVING: 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 over the last several months. The 6.6% increase of the Equal-Weighted Composite Index in May 2012 over its year-ago level was the largest such gain since before the start of the most recent recession in 2007. Growth in demand for smaller and lower-quality commercial property assets has caught up to that of the institutional-quality subset in recent quarters, as reflected in the uptick in pricing.
- RECOVERY IN MARKET FUNDAMENTALS BOOST PRICING: The investment-grade sector experienced relatively strong absorption over the past year with office leasing activity concentrated in tech markets such as San Francisco, CA and Austin, TX and in lower-cost national distribution warehouse markets such as Chicago, IL and Dallas, TX. In the general commercial sector, the office and warehouse markets posted moderate net absorption in the second quarter of 2012, but losses in demand in the retail market eroded the top-line figure. Over the past year, demand growth has been consistently strong for investment grade and generally trending up for the general commercial sector, a pattern that has also been observed in the pricing indices.
- DISTRESS SALES CONTINUE TO DECLINE WITH IMPROVING FUNDAMENTALS: The percentage of commercial property selling at distressed prices in May 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 10 largest metropolitan 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, analytic services and marketing. 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 5.8 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 www.costar.com.