CoStar Commercial Repeat-Sale Indices, December 2011 Release
(With Data through October 2011)
Print Release (PDF)
CoStar’s monthly National Composite Index of commercial real estate prices recorded an impressive 1.8% monthly gain in October, continuing its upward trend. The index also increased 2.2% year-over-year, the first such increase since the economic downturn in 2008. The solid price recovery of investment-grade properties and the continued decline in distress sales spurred commercial property pricing growth. This month's CoStar Commercial Repeat Sale Index (CCRSI) provides the market's first look at October 2011 commercial real estate pricing. Based on 743 repeat sale transactions in October, and more than 100,000 repeat sale transactions since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.
October 2011 Highlights
- CCRSI’s monthly National Composite Index increased by 1.8% in October 2011 and posted its first positive year-over-year change since the economic downturn in 2008. The year-over-year increase reflected the long-awaited positive momentum in the National Composite index, which achieved a 1.3% average monthly growth rate over the six-month period between May and October 2011.
- The General Commercial Index continued its steady upward trend and increased by 1.4% in October. With six consecutive months of rising prices, the General Commercial index has reversed the 32-month downward trajectory in commercial property pricing that began in September 2008.
- The Investment Grade Index posted a strong monthly gain of 3.4% in October. After bottoming in late 2009, the Investment Grade Index fluctuated around the same level for almost two years. The recent price climb, which began in March of 2011 and took a brief pause in August, has been synchronizing with the price increase tracked by the General Commercial Index, an indication of an across-the-board recovery.
- The solid performance of both indices, General Commercial and Investment Grade, was supported by stable fundamentals across most commercial property markets, including improving occupancy, and softening downward pressure from distress sales. The level of distress sales as a percentage of general commercial repeat sales decreased from 33% in March of 2011 to 24% in October of 2011. This ratio dropped from 53% to 28% in the same period for investment-grade properties.
Monthly CCRSI Results
- CoStar’s Investment Grade Repeat Sales Index increased by 3.4% in October 2011 and is now 6.9% above the same period last year and 31.1% below its peak in August 2007.
- CoStar’s Composite Commercial Repeat Sales Index increased by 1.8% in October 2011. It is now 2.2% above the same period last year and 31.5% below its peak in August 2007.
- CoStar’s General Grade Commercial Repeat Sales Index increased by 1.4% in October 2011 and is now 1.1% above the same period last year and 32% below its peak in August 2007.
National Monthly Indices
Comparison Table for Current Release (Ending 10/31/2011)
| ||1 MONTH EARLIER ||1 QUARTER EARLIER ||1 YEAR EARLIER ||PEAK TO CURRENT |
|National All Property Type Composite || |
|National Investment Grade || |
|National General Commercial || |
Commentary on data
The CCRSI December 2011 report is based on data through the end of October 2011. With a total of 743 sales pairs for the month, transaction activity is staying on a par with its historical average. At the low point in the last downturn, a total of 385 sale transactions were recorded in January 2009. Of the total 743 October sales pairs, 599 were General Commercial property sales and 144 were Investment Grade. The pair counts for both are likely to increase slightly in coming months, as additional closings are recorded.
Overall transaction volume continues to trend upward as the average transaction size increases. In October 2011, the overall volume increased by 29.4% annually, while the average deal size increased by 23%.
Distress sales as a percentage of total sales continued to decline from 35.4% in March 2011 to 25.2% (187 sale pairs) of all repeat sale transactions in October 2011. Even though distress sales gradually declined over the past seven months, the overall level was still high on an historical basis, suggesting that distress continues to be a significant factor of CRE pricing.
We provide three graphs below showing the sales counts, dollar volume, and distress sales as a percentage of total sales. Note that by transaction count, General Grade sales pairs accounted for 80.6% of the total sales transactions, a ratio that has been stable over the past 12 months.
Number of Repeat-Sale Transactions by Count
Number of Repeat-Sale Transactions by Dollar Volume
Distressed Sales as a Percentage of Total Sales
U.S. Property Type Quarterly Indices through September of 2011
U.S. Regional Quarterly Indices through September of 2011
U.S. West Property Type Quarterly Indices through September of 2011
U.S. South Property Type Quarterly Indices through September of 2011
U.S. Midwest Property Type Quarterly Indices through September of 2011
U.S. Northeast Property Type Quarterly Indices through September of 2011
Office Top 10 Metros Quarterly Indices through September of 2011
Industrial Top 10 Metros Quarterly Indices through September of 2011
Retail Top 10 Metros Quarterly Indices through September of 2011
Multifamily Top 10 Metros Quarterly Indices through September of 2011
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, national Investment Grade Index and national General Commercial Index, which we report monthly, we report quarterly on 28 sub-indices in the CoStar index family. The sub-indices include breakdowns by property sector (office, industrial, retail, and multifamily), 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 sale pair is created. The prices from the first and second sale are then used to calculate price movement for the property. The aggregated price changes from all of the sale 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.
Director Strategic Communications & Investor Relations
About CoStar Group, Inc.
CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of information and analytic 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. Headquartered in Washington, D.C., CoStar maintains offices throughout the U.S. and in Europe with a staff of approximately 1,500 worldwide, including the industry's largest professional research organization. For more information, visit http://www.costar.com.