WASHINGTON, April 15, 2015 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at February 2015 commercial real estate pricing. Based on 1,144 repeat sales in February 2015 and more than 135,000 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 http://media.globenewswire.com/cache/9473/file/33280.pdf
CCRSI National Results Highlights
-
COMMERCIAL REAL ESTATE PRICES CONTINUED TO CLIMB IN FEBRUARY. 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—gained 1.5% and 1.4%, respectively, for the month of February 2015. Both indices have increased by more than 13% over the 12 months ending February 2015 as the pricing recovery for commercial property expanded into smaller markets and secondary property types.
-
EQUAL-WEIGHTED U.S. COMPOSITE INDEX HAS RECOVERED TO WITHIN 12% OF ITS PRE-RECESSION PEAK. Reflecting investor confidence in the depth and breadth of the recovery in commercial property markets, price growth is gaining momentum at the lower end of the market. The equal-weighted version of the U.S. Composite Index, which is more influenced by smaller-size transactions, has recovered by 37.4% from its trough in 2011 and is now 12% below its prior peak level, its highest average since the fourth quarter of 2008. The momentum shift in investment to lower-quality and smaller properties also appeared in the recent growth of the General Commercial segment, which has increased by 13.4% for the 12 months ended in February 2015, while its Investment Grade counterpart advanced by 9.3% during the same period. The value-weighted U.S. Composite Index is more heavily influenced by the high-value trades in primary markets that led the recovery. As a result, it exceeded its previous peak pricing level in 2008 by more than 8.8% in February 2015.
-
ABSORPTION OF AVAILABLE SPACE BECOMES MORE WIDESPREAD. The rate of net absorption of available space across the three major property types—office, retail, and industrial—slowed in the first quarter of 2015 from its pace in the last three quarters of 2014, a pattern that has been evident over the previous several years. Despite this seasonal slowdown, net absorption totaled 527.2 million square feet for the 12 months ended March 2015, 39.6% higher than the 12 months ended March 2014. Reflecting the extension of the pricing recovery to more markets and property types, net absorption in the General Commercial segment rose 61% over the 12-month period ended March 2015, compared with a 31.4% gain in the Investment Grade segment over the same period. During the early phases of the economic expansion, high-end properties led absorption trends as tenants capitalized on low rents to lease prime space. But as vacancies have fallen and rents have increased at the top end of the market, the leasing momentum is shifting toward low-end properties. In the office sector, for example, vacant space in the 4 and 5 Star property segment dipped below its 15-year average of 12% in 2014, sparking a sharper acceleration in absorption and rent growth for 3 Star properties for the 12 months ended March 2015.
- HIGH LEVEL OF INVESTMENT ACTIVITY SUGGESTS COMMERCIAL REAL ESTATE WILL CONTINUE TO BE A SOUGHT-AFTER ASSET CLASS IN 2015. Trading activity in the first few months of the year typically falls from the previous year-end level, and this pattern was evident in 2015. However, despite the slowdown from the fourth quarter of 2014, transaction activity through February 2015 suggests this will be another active year for commercial real estate acquisitions. The U.S. composite sales pair count of 2,357 and sales volume of $18.9 billion in the first two months of 2015 exceeded totals from the same period in 2014. Meanwhile, the share of commercial property selling at distressed prices fell from 32% in 2011 to less than 10% for the 12 months ended February 2015.
| Monthly CCRSI Results, Data through February of 2015 | ||||
| 1 Month | 1 Quarter | 1 Year | Trough to | |
| Earlier | Earlier | Earlier | Current | |
| Value-Weighted U.S. Composite Index | 1.5% | 3.4% | 13.8% | 74.8%1 |
| Equal-Weighted U.S. Composite Index | 1.4% | 2.2% | 13.1% | 37.3%2 |
| U.S. Investment Grade Index | 1.0% | 2.4% | 9.3% | 51.5%3 |
| U.S. General Commercial Index | 1.5% | 2.2% | 13.4% | 36.1%4 |
| 1 Trough Date: January 2010 2 Trough Date: March 2011 3 Trough Date: March 2010 4 Trough Date: March 2011 | ||||
| Market Fundamentals Data through March of 2015 | ||||
| Annual Net Absorption (in millions of square feet) | ||||
| 2012Q1 | 2013Q1 | 2014Q1 | 2015Q1 | |
| Aggregate | 305.9 | 338.7 | 377.7 | 527.2 |
| Investment Grade | 203.8 | 251.2 | 273.2 | 359.0 |
| General Commercial | 102.1 | 87.5 | 104.5 | 168.3 |
| Note: "Net Absorption" is the change in occupied space, calculated based on three types of properties: office, retail and industrial. | ||||
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 http://media.globenewswire.com/cache/9473/file/33281.pdf
For more information about the CCRSI Indices, including the full accompanying data set and research methodology, legal notices and disclaimer, please visit http://costargroup.com/costar-news/ccrsi.
ABOUT COSTAR GROUP, INC.
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. Through LoopNet, the Company operates the most heavily trafficked commercial real estate marketplace online with more than 9 million registered members. Apartments.com is a premier online apartment resource for renters that matches apartment seekers with great apartment homes and provides property managers and owners a proven platform for marketing their properties. CoStar operates websites that have over 19 million unique monthly visitors in aggregate during January 2015. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S., in Europe and in Toronto, Canada with a staff of over 2,400 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.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 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 the risk that the level of commercial real estate transaction activity seen during the first two months of 2015 is not maintained or increased through the remainder of 2015; and 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. 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 in CoStar's Annual Report on Form 10-K for the year ended December 31, 2014, which is filed with the SEC, including in the "Risk Factors" section of the filing, as well as the company's other filings with the SEC available at the SEC's website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements, whether as a result of new information, future events or otherwise.
