WASHINGTON, Jan. 12, 2011 (GLOBE NEWSWIRE) -- Monthly Pricing Performance Update for U.S. Commercial Real Estate issued in January 2011 Release of Costar Commercial Repeat-Sales Indices (www.costar.com/ccrsi) based on sales activity through November 2010.
- CoStar's three national commercial real estate repeat sales indices were down for the month of November despite notable price increases for high-profile core transactions in Washington D.C. and New York City.
- The Investment Grade index was down 4.1% for the month giving back some, but not all of the 8.1% net gains observed over August, September and October. Notwithstanding November's decline, the Investment Grade index is still up 7.6% since its cyclical low earlier this year.
- While price declines for non-investment grade real estate decelerated, the General Real Estate Index still fell 1.8% for the month. November's decline puts the index 3.9% below its level 3 months prior, and 11.7% below year-ago levels. It is now at its lowest point since 2004 as smaller and mid-sized regional banks, which normally make up the bulk of lending for smaller, local real estate, continue to struggle with distressed inventory and have yet to significantly open their lending spigots.
- Quarterly market-level indices suggest large gains over the past several quarters in Washington D.C. and moderate gains in the most recent New York data. These markets have been the exception rather than the rule.
Negative national trends contrast with the strong and increasing interest in trophy properties within core markets where prices have continued to climb during 2010. Collectively they show a market that is not just bifurcated but possibly trifurcated, with trophy assets commanding bidding wars, smaller assets languishing, particularly in secondary and tertiary markets; and distressed properties trickling onto the market as banks recycle assets at a relatively measured pace.
Comparison Table for Current Release (ending 11/30/2010)
|
1 MONTH EARLIER |
1 QUARTER EARLIER |
1 YEAR EARLIER |
2 YEARS EARLIER |
|
| National All Property Type Aggregate | -2.57% | -1.98% | -8.96% | -26.06% |
| National Investment Grade | -4.07% | +3.98% | -2.30% | -26.84% |
| National General All Property | -1.75% | -3.92% | -11.71% | -24.89% |
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.
Multiple charts and graphs available at https://media.globenewswire.com/cache/9473/file/9405.pdf
Commentary on data
The CCRSI January 2011 report is based on data through the end of November 2010. In November of 2010, 605 pair sales were recorded compared to 596 in the prior month and 685 in September. Several of the late recorded sales were distressed sales forcing the indices down from the prior two months. Investment pair counts have been increasing modestly while the general pair count has been steady. Investment volume for November continues steady when compared to October and general pair volume is up significantly.
Overall, there has been a significant upward trend in pair volume going back to 2009. January 2009 appears to have been the low point in the downturn in terms of pair volume, when 376 transactions were recorded. Since then, pair dollar volume has increased overall and the average deal sizes for both general and investment grade have increased.
The charts and graphs available at https://media.globenewswire.com/cache/9473/file/9405.pdf, include one showing the sale counts and a second showing the sale volume weighted by the dollar size of the deals. Note that by transaction count the general sales accounted for 70% of the sale counts in November, while by volume the general sales accounted for only 28% of the total sales. By volume, we saw a spike in investment grade sales in September with nearly double the volume observed in October. The average deal size within the investment grade index was more than $23 million in September compared to $11.4 million in November and $11.8 million in October. The general real estate index saw higher average prices in November of approximately $1.9 million compared to $1.3 million in October.
Distress continues to be a significant factor in the index results with about one fifth of all transactions being distress sales and one fourth of the investment grade transactions.
For more information about CCRSI Indices, including our legal notices and disclaimer, please visit www.costar.com/ccrsi.
About CoStar Group, Inc.
CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of information, analytic and marketing 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, DC, 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 www.costar.com.
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 subject to many risks and uncertainties that could cause actual results to differ materially from these statements. More information about potential factors that could cause actual results to differ materially from those discussed 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 CoStar's Form 10-K for the year ended December 31, 2009, and CoStar's Form 10-Q for the quarter ended September 30, 2010, under the heading "Risk Factors." In addition to these statements, there can be no assurance that smaller and mid-sized regional banks will continue to struggle with distressed inventory and continue to hold back on lending; that the trends in pair volume, pair dollar volume and average deal sizes will continue; that distress sales will continue at the rates discussed in this release; and that the trends represented or implied by the indices will continue. All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements.