WASHINGTON, July 17, 2013 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provide the market's first look at May 2013 commercial real estate pricing. Based on 1,220 repeat sales in May 2013 and more than 125,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.
May 2013 CCRSI National Results Highlights
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COMMERCIAL REAL ESTATE PRICES ADVANCE ACROSS THE BOARD IN MAY: The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index—increased by 0.7% and 2.0%, respectively, in the month of May 2013, reflecting continued improvement in market fundamentals and increased investment activity. The value-weighted index, which is heavily influenced by larger transactions and typically tracks with high quality core real estate prices, has now increased by 41% from its most recent trough in 2010. For comparison, the equal-weighted index, which is influenced by smaller, more numerous opportunistic transactions, has improved by 10% from its bottom in 2011.
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INVESTMENT GRADE INDEX REACHES HIGHEST LEVEL IN MORE THAN FOUR YEARS: Within the equal-weighted U.S. Composite Index, the Investment Grade segment shook off the seasonal slump of the previous months and surged ahead by 2.6% in May 2013. The Investment Grade index, which broadly encompasses upper-middle tier properties, has now recovered by 24.6% since prices for investment-grade property reached a trough in October 2009. Pricing in the General Commercial segment has taken longer to recover, but investor demand for smaller and lower-quality commercial property assets has risen in tandem with those in the investment grade segment in recent months. Pricing in the General Commercial segment advanced 1.7% from the previous month and 8.2% from its recent nadir in the first quarter of 2011 as investment activity has increasingly extended into secondary markets and property types.
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STRONG SECOND QUARTER 2013 ABSORPTION IN BOTH INVESTMENT GRADE AND GENERAL COMMERCIAL SEGMENTS SUPPORTS PRICING GAINS: Net absorption of available space for the three major property types – office, retail, and industrial – has been positive over the past three years. For the majority of that period, core office markets, including New York, San Francisco and Houston, and large distribution markets such as Dallas and Chicago, have led absorption in the Investment Grade segment, as reflected by the faster pricing growth in this index since 2009. More recently though, the General Commercial segment has posted robust gains in absorption as well, indicating a broader and more sustained commercial real estate recovery.
- DISTRESS SALES DECLINE WITH IMPROVING FUNDAMENTALS: The percentage of commercial property selling at distressed prices declined to an average of 14.1% in April and May, the lowest two-month average on record since 2008. The decline in the number of distressed trades continues to support higher, more consistent pricing and has enhanced market liquidity by giving buyers and sellers greater confidence to do deals.
Monthly CCRSI Results, Data through May of 2013
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1 Month Earlier |
1 Quarter Earlier |
1 Year Earlier |
Trough to Current |
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| Value-Weighted U.S. Composite Index | 0.7% | 2.4% | 9.4% | 41.0%1 |
| Equal-Weighted U.S. Composite Index | 2.0% | 5.0% | 8.0% | 10.6%2 |
| U.S. Investment Grade Index | 2.6% | 6.2% | 14.0% | 24.6%3 |
| U.S. General Commercial Index | 1.7% | 4.0% | 6.2% | 8.2%4 |
| 1 Trough Date: January, 2010 2 Trough Date: March, 2011 3 Trough Date: October, 2009 4 Trough Date: March, 2011 | ||||
Monthly Fundamentals, Data through June of 2013
| Net Absorption (in millions of square feet) | |||||
| 2011 | 2012 | 2013Q1 | 2013Q2 | ||
| Aggregate | 283.3 | 307.4 | 92.6 | 81.8 | |
| Investment Grade | 201.2 | 218.3 | 61.7 | 47.6 | |
| General Commercial | 82.1 | 89.1 | 30.9 | 34.2 | |
| Note: "Net Absorption" is the change in occupied space, calculated based on three types of properties: office, retail, and industrial. | |||||
A chart accompanying this release is available at http://media.globenewswire.com/cache/9473/file/20933.pdf
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 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.
More charts accompanying this release are available at http://media.globenewswire.com/cache/9473/file/20934.pdf
CONTACT:
For more information about the CCRSI Indices, including a detailed methodology, fact sheet, legal notices and disclaimer, and an archive of previous releases, please visit http://www.costar.com/ccrsi.
ABOUT COSTAR GROUP, INC.
CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of information, analytics 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. Through LoopNet, the Company operates the most heavily trafficked commercial real estate marketplace online with more than 7 million registered members. CoStar operates websites that have approximately 10 million unique monthly visitors in aggregate. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe with a staff of approximately 2,000 worldwide, including the industry's largest professional research organization. For more information, visit http://www.costar.com.
This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's plans, objectives, expectations, beliefs, intentions or strategies regarding the future. These statements are based upon the current beliefs and expectations of management of CoStar 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; the risk that investor demand and commercial real estate pricing levels will not continue at the levels or with the trends indicated in this release; the possibility that the commercial real estate industry does not realize a broader and more sustained recovery; and the risk that the decline in distressed trades will not continue to support higher, more consistent pricing and enhanced market liquidity. 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, 2012, and CoStar's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, under the heading "Risk Factors." All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
