CoStar Commercial Repeat-Sale Indices, July 2011 Release
(With Data through May, 2011)
Print Release (PDF)
- This month’s CoStar Commercial Repeat Sale Index (“CCRSI”) provides the market’s first look at May 2011 commercial real estate pricing.
- The CCRSI provides the broadest measure of commercial real estate repeat sales activity tracking more than 793 repeat sale transactions in May 2011, and more than 100,000 repeat sale transactions since its inception.
May 2011 Pricing Highlights
- Total sale pair dollar volume continued to rise significantly in May 2011, increasing more than 150% on a year-over-year basis.
- Investment Grade property sales volume also continued to rise significantly in May 2011 increasing more than 191% on a year-over-year basis. As a result, Investment Grade sales volume comprised 79.2% of total May 2011 sales volume, up substantially from 61.9% in April 2011.
- General Grade property sales volume also continued to rise in May 2011 increasing 62% on a year-over-year basis.
- However, Investment Grade sale pair volume for the ten largest markets declined in May 2011 as a percentage of total sale pair volume to 38.7% from an average of 45.8% over the last two years.
- May 2011 saw no discernible changes in property type mix
- The percentage of Investment Grade sale pairs that were distressed declined to 28.3% in May 2011, the lowest since December 2009.
- Sale pairs with a prior sale date between 2005 and 2008 experienced an average annual loss of 6% in May 2011, the lowest since December 2009. However this was 15 times greater than the average annual loss of just .4% for sale pairs with a prior sale date between 2009 and 2010.
CCRSI Index Results
- CoStar’s Composite Commercial Repeat Sales Index increased by 1.6% in May 2011. It is now 6.8% below the same period last year and 34.4% below its peak in August 2007.
- CoStar’s General Grade Commercial Repeat Sales Index increased by .9% in May 2011, and is now 8.6% below its year-ago level and off 34.5% from its August 2007 peak.
- CoStar’s Investment Grade Commercial Repeat Sales Index increased 4.4% in May 2011 and is now 5% above the same period last year and 35% below its peak in August 2007.
National Composite Monthly Indices
Comparison Table for Current Release (Ending 3/31/2011)
| ||1 Month |
|1 Year |
|National All Property Type Composite ||-1.6% ||-6.8% ||-34.4% |
|National Investment Grade ||-4.4% ||5.0% ||-35.0% |
|National General All Property ||-0.9% ||-8.6% ||-34.5% |
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, there are a total of 32 sub-indices in the CoStar index family. The sub-indices include breakdowns by property sector (office, industrial, retail, multifamily 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 national composite index is produced on a monthly basis.
The CoStar indices are constructed using a repeat sales methodology, widely considered as the most accurate way to measure price changes for real estate. The repeat sales methodology measures the movement in the prices of commercial properties by collecting data on the actual sales prices that occur when a property sells. 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. By aggregating all the price changes from all of the sale pairs, a price index is created.
COMMENTARY ON DATA
The CCRSI July 2011 report is based on data through the end of May, 2011. In May 2011, 829 sales pairs were recorded compared to 854 in the prior month. However, despite the monthly decline in transaction volume, there has been a significant upward trend in pair count volume going back to 2009. January 2009 appears to have been the low point in the downturn in terms of pair volume, when 385 transactions were recorded.
As previously noted dollar sales volume continues to trend upward significantly as the average transaction size increases. The average investment grade deal size in May 2011 was $33.2 million, nearly double the April 2011 average transaction size of $16.9 million. The average dollar size for the general index was $1.7 million in May 2011 as compared to the average April transaction size of $1.65 million.
For the composite index, distress sales as a percent of the total sales pairs dropped to 28.3% in May 2011 from 29.4% in April, 2011. For the investment grade index, the percent of distressed sales declined to 32.8% in May 2011 from 41% in April 2011. By property type the highest percent of distress in the May, 2011 pairs was in hospitality at 37.8% followed by multifamily at 30.9%, office at 27.1%, retail at 26.7%, and industrial at 23%.
We provide one graph below showing the sales counts and a second showing dollar volume. Note that by transaction count General Grade sale pairs accounted for 83.5% of the total sales transaction count in May 2011 down from 85.6% in May 2010.
Number of Repeat-Sale Transactions by Volume
National Property Type Quarterly Indices Through March of 2011
U.S. Regional Quarterly Indices Through March 2011
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
Senior Real Estate Strategist
Twitter - @CoStarMacke