Market Overview

Latest CoStar Commercial Repeat Sale Analysis: Composite Price Indices Post Moderate Gains in July

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WASHINGTON, Sept. 16, 2015 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at July 2015 commercial real estate pricing. Based on 1,491 repeat sales in July 2015 and more than 145,000 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/37303.pdf

CCRSI National Results Highlights

  • NATIONAL COMPOSITE PRICE INDICES POST MODERATE GAINS IN JULY. Both the equal- and value-weighted national composite price indices advanced in July 2015 as a combination of strong market fundamentals, low interest rates and improving market liquidity continued to support conditions for CRE price growth. However, the pace of price growth cooled slightly from that of the previous six months ending in June 2015.
  • MODERATION IN PRICE GROWTH MOST EVIDENT AT HIGH END OF THE MARKET. The moderation in the rate of price growth was especially evident at the high end of the market where pricing has already exceeded prior peak levels. CoStar's value-weighted U.S. Composite Index, which is influenced by high-value trades, advanced 0.3% in July 2015 compared with a 1.1% average monthly pace from January 2015 through June 2015. The value-weighted U.S. Composite Index is already more than 13% above its prerecession peak level. The equal-weighted U.S. Composite Index increased 0.9% in July 2015, down slightly from the 1.1% average monthly pace from January 2015 to June 2015. It has now advanced to within 7.5% of its prerecession peak, supported by increased investor interest beyond core properties in primary markets.
  • GENERAL COMMERCIAL SEGMENT LED GROWTH IN EQUAL-WEIGHTED INDEX. Pricing in the General Commercial segment, which is weighted toward the sale of smaller, lower-end properties, has continued to gain momentum from improving market fundamentals and increased capital flows across the size and quality spectrum of commercial property. The General Commercial segment increased by 1.3% in July 2015 and 12.2% for the 12 months ending in July 2015, while its Investment Grade counterpart fell 0.9% for the month, but still grew 9.6% for the 12 months ending in July 2015. The General Commercial Index has moved to within 8.1% of its prerecession peak. While recent price growth has decelerated in the Investment Grade segment, it is still within 5% of its prior peak.
  • SALES ACTIVITY IN JULY 2015 SLOWED FROM STRONG PACE SET IN FIRST TWO QUARTERS OF 2015, SALES VOLUME REMAINED ROBUST ON AN ANNUAL BASIS. Composite pair volume in July 2015 declined 7.4% from the robust monthly pace set from January 2015 to June of 2015. However, repeat-sale deal volume of $119 billion for the 12-month period ending in July 2015 marked a 29% increase from the previous 12-month period ending in July 2014, indicating continued strong deal volume. Consistent with recent pricing gains, sales volume increased faster at the low end of the market as investors broadened their search for investment yield. Transaction volume in the General Commercial Index for July 2015 increased 3.2% from the pace set from January 2015 to June 2015, while in the Investment Grade segment repeat-sale deal volume fell 12.4% during the same period. 
  • LIQUIDITY METRICS SHOW MARKED IMPROVEMENT. The average time on market for for-sale properties fell 9.9% in the 12-month period ending in July 2015, the largest annual decline in this metric since the current recovery began. Meanwhile, the sale price-to-asking price ratio narrowed by 3.4 percentage points to 92.4% and the share of properties withdrawn from the market by discouraged sellers receded by 5.2 percentage points to 33% during the 12-month period ending in July 2015. Taken together these improving liquidity measures indicate a continued positive environment for sellers.
         
Monthly CCRSI Results, Data Through July 2015        
  1 Month
Earlier
1 Quarter
Earlier
1 Year
Earlier
Trough to
Current
Value-Weighted U.S. Composite Index 0.33% 1.87% 12.93% 81.55%1
Equal-Weighted U.S. Composite Index 0.89% 3.74% 11.67% 44.51%2
U.S. Investment Grade Index -0.91% 1.62% 9.62% 56.17%3
U.S. General Commercial Index 1.28% 4.18% 12.15% 43.86%4
1 Trough Date: January 2010 2 Trough Date: March 2011 3 Trough Date: March 2010 4 Trough Date: March 2011
         
Monthly Liquidity Indicators, Data Through July 2015         
  Current 1 Month
Earlier
1 Quarter
Earlier
1 Year
Earlier
Days on Market 371 376 384 412
Sale Price-to-Asking Price Ratio 92.4% 92.1% 91.5% 89.1%
 Withdrawal Rate 33.0% 33.3% 33.5% 38.2%
Average days on market and sale-price-to-asking-price ratio are both calculated based on listings that are closed and confirmed by CoStar's research team. The withdrawal rate is the ratio of listings withdrawn from the market by the seller to all listings for a given month. 

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/37304.pdf

For more information about the CCRSI Indices, including the full accompanying data set and research methodology, 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 9.8 million registered members. Apartments.com, ApartmentFinder.com and ApartmentHome-Living.com 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. CoStar Group operates websites with over 23.6 million unique monthly visitors in aggregate as of June 2015. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Toronto with a staff of approximately 2,900 worldwide, including the industry's largest professional research organization. For more information, visit http://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; the risk that sellers do not continue to experience a positive environment, including continued commercial property price growth in the second half of 2015; and 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, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, 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.

CONTACT: Becky Carr Chief Marketing Officer bcarr@costargroup.com

CoStar Group, Inc. logo

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