Latest CoStar Commercial Repeat Sale Analysis: Property Price Indices Spring Forward In May
WASHINGTON, July 15, 2015 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at May 2015 commercial real estate pricing trends. Based on 1,258 repeat sales in May 2015 and more than 140,000 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/35644.pdf
CCRSI National Results Highlights
FOLLOWING SLOWDOWN IN APRIL, CRE PRICES REBOUNDED IN MAY WITH STRONG SHOWING ACROSS THE BOARD. 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 1.4% and 1.7%, respectively, in the month of May 2015. The value-weighted U.S. Composite Index advanced 12.2% in the trailing 12 months ended May 2015, and now stands 12% above its prior peak, reflecting the strong recovery of larger, higher-value properties. The equal-weighted U.S. Composite Index began its recovery later in the cycle but has increased at a faster rate of 14.1% in the trailing 12 months ended May 2015 as smaller commercial properties continued to gain favor with investors.
EQUAL-WEIGHTED INDEX GAINED MOMENTUM. The momentum shift to lower-quality and smaller properties also appeared in the recent growth of the General Commercial segment within CCRSI's equal-weighted U.S Composite Index. The General Commercial Index advanced 14.6% for the 12 months ended May 2015, the fastest rate among the four major CRE price indices during this time, while its Investment Grade counterpart rose 11.9%.
CRE SPACE ABSORPTION SOARED TO HIGHEST LEVEL YET IN RECOVERY. For the 12 months ended as of the second quarter of 2015, net absorption across the three major commercial property types - office, retail, and industrial - totaled 575.5 million square feet, a 39.3% increase over the 12-month period ended as of the second quarter of 2014, and the highest annual total on record since 2008.
ROBUST LEASING ACTIVITY SUPPORTING PRICE RECOVERY EXTENSION ACROSS MORE MARKETS AND PROPERTY TYPES. Net absorption in the General Commercial segment rose 37% over the 12-month period ended as of the second quarter of 2015. Meanwhile, net absorption in the Investment Grade segment remained equally strong, increasing by nearly 40% as the flight to quality space among commercial tenants continued over the 12-month period ended as of the second quarter of 2015. In the office sector, for example, net absorption within 4- and 5-Star properties grew at nearly three times the rate of properties rated 3-Star or lower during the same period.
- INVESTMENT ACTIVITY CONTINUED TO SURGE. Commercial real estate trading activity in the first five months of 2015 was well above last year's total. The sales volume suggests 2015 could be another record year for commercial real estate acquisitions. In fact, the U.S. composite pair volume of $115.7 billion1 for the 12 months ended May 2015 was the highest on record for the CCRSI, indicating that investment flows into real estate remain strong.
1 Does not include the $4.4 billion sale of Stuyvesant Town-Peter Cooper Village apartments in New York City in June 2014 via deed in lieu of foreclosure.
|Monthly CCRSI Results, Data through May 2015|
|1 Month||1 Quarter||1 Year||Trough To|
|Value-Weighted U.S. Composite Index||1.4%||2.6%||12.2%||79.6%1|
|Equal-Weighted U.S. Composite Index||1.7%||2.9%||14.1%||41.3%2|
|U.S. Investment Grade Index||1.5%||2.7%||11.9%||55.8%3|
|U.S. General Commercial Index||1.7%||3.1%||14.6%||40.2%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 June 2015|
|Annual Net Absorption (In Millions Of Square Feet)|
|2012 Q2||2013 Q2||2014 Q2||2015 Q2|
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/35645.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. LoopNet is the most heavily trafficked commercial real estate marketplace online with more than 9 million registered members. Apartments.com, ApartmentFinder.com and ApartmentHomeLiving.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners with a proven platform for marketing their properties. CoStar operates websites with over 22.4 million unique monthly visitors in aggregate as of March 2015. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Toronto, Canada with a staff of approximately 3,000 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 or sales volume is not maintained or increased through the remainder of 2015 and that 2015 is not ultimately another record year for commercial real estate acquisitions; and the risk that investor demand, commercial real estate pricing levels and investment flows into real estate 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, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, each of 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.