Latest CoStar Commercial Repeat-Sale Analysis: U.S. Property Prices See Slower Growth in First Quarter on Lower Transaction Activity

Slower Price Momentum Seen Across All Property Types and Regions

WASHINGTON, April 29, 2016 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at March 2016 commercial real estate pricing. Based on 1,188 repeat sales in March 2016 and more than 155,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.

Several charts accompanying this release are available at

CCRSI National Results Highlights

  • COMMERCIAL PROPERTY PRICE GROWTH REMAINED MUTED IN FIRST QUARTER. After declining slightly in the first two months of 2016, both CCRSI’s national composite price indices ended the first quarter of 2016 on a modestly positive note as price growth returned in March 2016. For the first quarter, the value-weighted U.S. Composite Index, influenced by the sale of high-quality, larger assets, advanced by 0.4%, while the equal-weighted U.S. Composite Index, reflecting more numerous smaller deals, remained essentially unchanged, rising just 0.1%.
  • PRICING MOMENTUM HAS SLOWED ACROSS THE BOARD. The most recent quarterly reading in the major composite indices represents a slowdown from 2014–15, when both indices grew at a quarterly average rate of nearly 3%. The slowdown was evident across all major property types and regions in the first quarter of 2016.
  • LOWER TRANSACTION ACTIVITY CONTRIBUTING TO MORE MODEST PRICE GROWTH. Total investment volume of $24 billion in the first quarter of 2016 was down 16.7% from the first quarter of 2015 as capital flows continued to decelerate from last year’s record-setting levels. While favorable market conditions and deteriorating international economic conditions appear to provide the motivation for continuing elevated liquidity in the U.S. real estate markets, the rising cost of debt is expected to contribute to slower deal volume and price growth in 2016. 
  • FIRST-QUARTER PRICE DECLINES IN INDUSTRIAL AND RETAIL PROPERTY SECTORS HOLD DOWN EQUAL-WEIGHTED U.S. COMPOSITE INDEX. The U.S. Industrial and Retail indices slipped 0.1% and 0.4%, respectively, in the first quarter of 2016. Meanwhile, the U.S. Office and Multifamily indices continued to grow in the first quarter, but more slowly than in the last two years. The CCRSI Prime Metro indices handily outpaced growth in overall property-type indices in the first quarter, suggesting that price growth remained firmer for property at the top of the market.
  • PROPERTY PRICES IN NORTHEAST REGION HELD STEADY WHILE MIDWEST LAGGED. The Midwest Composite Index fell 1% in the first quarter, with widespread declines in all four regional property indices. Meanwhile, the Northeast Composite Index, with its concentration of large, core markets that led price growth in the recovery—including New York and Boston—maintained its dominant position. The Northeast index had the strongest growth of the four major regions at 0.8% in the first quarter of 2016, and it remained the only regional index that has exceeded its pre-recession peak level.

Monthly CCRSI Results, Data Through March 2016

 1 Month
1 Quarter
1 Year
Trough to
Value-Weighted U.S. Composite Index 0.4% 0.4% 7.3%90.3%1
Equal-Weighted U.S. Composite Index 0.4% 0.1% 7.2%50.1%2
U.S. Investment-Grade Index 0.5% -0.1% 5.3%64.4%3
U.S. General Commercial Index 0.4% 0.1% 7.5%49.1%4
1 Trough Date: January 2010  2 Trough Date: March 2011  3 Trough Date: March 2010  4 Trough Date: March 2011

Quarterly CCRSI Property Type Results

  • PRICING GAINS MODERATED ACROSS MAJOR PROPERTY SECTORS DURING FIRST QUARTER. While all major property types posted slower price growth during the first quarter, the Prime Markets Indices within each property sector, which are dominated by the large, core, coastal metros, generally have increased more rapidly than the national property type indices, further suggesting that commercial property in core markets remained attractive to investors, even as overall investment volume fell from its pace last year.
  • MULTIFAMILY INDEX REMAINS GROWTH LEADER AMONG FOUR MAJOR PROPERTY TYPES. The U.S. Multifamily Index expanded 0.8% in the first quarter of 2016 and 9.9% in the 12-month period ending in March 2016, the strongest quarterly and annual rates among the four major property types. It remains the only U.S. property index to have regained its pre-recession peak, ending the first quarter of 2016 18.8% above its previous high level in 2007. Notably, the Prime Multifamily Metros Index has skyrocketed to 44.9% above 2007 levels. While an unprecedented pipeline of new supply is beginning to exert pressure on multifamily fundamentals nationally, vacancy rates remained relatively tight at 4.4% in the first quarter of 2016.
  • HEALTHY OFFICE FUNDAMENTALS SUPPORTED QUARTERLY PRICE GAINS. Office prices increased 0.7% in the first quarter of 2016 and 8.8% in the 12-month period ending in March 2016, as office rent growth and occupancy rates have nearly reached the market’s previous peak. Price growth was higher in the Prime Office Metros Index, which advanced by a stronger 1.9% for the first quarter of 2016 and 12.1% for the 12-month period ending in March 2016.    
  • DESPITE FIRST QUARTER SLIDE, U.S. RETAIL INDEX REMAINS WITHIN 1% OF PREVIOUS PEAK. Prices for retail property dipped 0.4% in the first quarter of 2016 but were still up 6.4% in the 12-month period ending in March 2016. Despite the recent slowdown, retail pricing remains the second-best performer among the four major property types behind multifamily. Pricing gains for retail property aggregated in top-tier trade areas during the recovery. As a result, the Prime Retail Metros Index is now 17% above its prior peak after advancing 5.2% in the 12-month period ending in March 2016.
  • U.S. INDUSTRIAL INDEX POSTED 6.7% ANNUALIZED GAIN DESPITE 0.1% DIP IN FIRST QUARTER. Industrial market fundamentals remained healthy through the first quarter of 2016. Vacancies dropped below their lowest point in the previous cycle, while industrial rents continued to increase, besting the other major property types with annual growth of over 6% for the 12-month period ending in March 2016. Despite the recent slowdown in the first quarter of 2016, the U.S. Industrial index advanced 6.7% in the 12-month period ending in March 2016. Core industrial markets remained in favor as the Prime Industrial Metros Index advanced by 11.3% in the 12-month period ending in March 2016. 
  • U.S. HOSPITALITY INDEX SEES 3.8% FIRST QUARTER INCREASE, STRONGEST GROWTH RATE AMONG ALL SIX PROPERTY INDICES.  The Hotel Index was one of only two property-type indices, along with the U.S. Land Index, to post double-digit annualized growth through March 2016. National hotel occupancies have climbed well above last cycle’s highs, fueling room rate and RevPAR growth as well as investor demand. While the Hospitality Index suffered the largest peak-to-trough decline in the last cycle, dropping 44.2%, it has now moved to within 5.1% of its pre-recession peak.
  • LAND INDEX GAINED 1.7% IN FIRST QUARTER, UP 10.9% IN 12-MONTH PERIOD ENDING IN MARCH 2016. Driven by strong demand for development sites across all property sectors, the Land Index closed the first quarter of 2016 with a double-digit annualized growth rate. Despite the healthy recent gains, the Land Index, which did not reach its trough for this cycle until 2012, remains 15.1% below its previous peak.

Quarterly CCRSI Regional Results

  • NORTHEAST REMAINED FASTEST-GROWING REGIONAL INDEX IN FIRST QUARTER. Thanks to a strong concentration of top-tier markets that have been a magnet for investment since early in the current cycle, the Northeast Composite Index advanced 0.8% in the first quarter of 2016 and 9% in the 12-month period ended in March 2016, pushing it 15.5% above its prerecession peak. All four property type indices within the Northeast region have surpassed their pre-recession peaks as well. The Northeast Multifamily and Retail Indices led pricing growth in the region and have soared past their prior peak pricing levels by 45.8% and 25.1%, respectively. Meanwhile, solid growth in the Northeast Office and Industrial Indices during the first quarter of 2016 propelled both indices to 4.3% and 6.3%, respectively, above their pre-recession peak levels. 
  • WEST REGION MOVED TO WITHIN 1% OF ITS PREVIOUS PEAK. After advancing 0.5% in the first quarter of 2016 and 8.2% in the 12-month period ending in March 2016, West Composite Index is now just 0.6% shy of its peak in the last cycle. The West Multifamily Index increased 11% and the West Office Index increased 10.6% in the 12-month period ended in March 2016—the second- and third-strongest growth rates among all 16 regional property type indices—behind only the Northeast Multifamily Index.  Supporting such exceptional price growth has been strong fundamentals in tech-driven markets, including San Francisco and San Jose, which continued to post double-digit office rent growth for the 12-month period ended in March 2016.
  • SOUTH REGION INCREASED 0.3% IN FIRST QUARTER AND 7.8% IN 12-MONTH PERIOD ENDED IN MARCH 2016. Similar to trends in the West region, the South Office and South Multifamily indices led pricing growth in the South region, expanding 9.4% and 9.9%, respectively, in the 12-month period ended in March 2016. Growth in the South Multifamily Index has been particularly strong, surpassing its pre-recession peak by 7.5% in March 2016, the only property type index in the South region to do so. This was despite having the steepest peak-to-trough decline (42.3%) of any property type in the region during the downturn. 
  • MIDWEST REGION LAGGED BEHIND FOUR MAJOR REGIONS DECLINING 1% IN FIRST QUARTER. All four regional property indices within the Midwest region were impacted by the slowdown, with the Midwest Industrial and Retail Indices declining the furthest, by 1.5% and 1.1%, respectively, in the first quarter of 2016. Meanwhile, the Midwest Multifamily Index ticked down a more modest 0.3%, and the Midwest Office Index fell 0.9% in the first quarter of 2016. 

About the CoStar Commercial Repeat-Sale Indices

The CoStar Commercial Repeat-Sale Indices (CCRSI) is the most comprehensive and accurate measure 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

For more information about the CCRSI Indices, including the full accompanying data set and research methodology, legal notices and disclaimer, please visit


CoStar Group, Inc. (Nasdaq:CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. 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. LoopNet is the most heavily trafficked commercial real estate marketplace online with more than 10 million registered members., and form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Through an exclusive partnership with Move, a subsidiary of News Corporation, is the exclusive provider of apartment community listings across Move’s family of websites, which include®, and  CoStar Group’s websites attracted an average of approximately 24 million unique monthly visitors in aggregate in the first quarter of 2016. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of approximately 2,600 worldwide, including the industry’s largest professional research organization. For more information, visit                                                                                                            

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 based upon current beliefs 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, including continuing elevated liquidity in the U.S. real estate markets as a result of favorable market conditions and deteriorating international economic conditions, and the rising cost of debt and the expected resulting slower deal volume and price growth in 2016; and the risk that transaction activity, investor demand, market supply, vacancy rates, absorption and commercial real estate pricing levels and growth will not continue at the levels or with the trends indicated in this release.  More information about potential factors that could cause results to differ materially from those anticipated 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 in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2015, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, each of which is filed with the SEC, including in the “Risk Factors” section of that filing, as well as CoStar’s other filings with the SEC available at the SEC’s website ( All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



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