Latest CoStar Commercial Repeat-Sale Analysis: Composite Price Indices Resume Solid Growth Boosted by Strong Net Absorbtion
WASHINGTON, June 29, 2016 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at commercial real estate pricing trends through May 2016. Based on 1,319 repeat sale pairs in May 2016 and more than 160,000 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://www.globenewswire.com/NewsRoom/AttachmentNg/e0d7640f-4093-4ca6-8430-d81cdd5f08b3.
CCRSI National Results Highlights
- PRICE INDICES RESUMED SOLID GROWTH IN MAY. Both of CCRSI's two major composite price indices advanced by more than 1% in the month of May 2016, erasing earlier-year declines. After the two major indices backtracked in the first quarter of 2016 amid global economic uncertainty and a seasonal slowdown in investment activity, price growth within the commercial real estate sector during May 2016 returned to the average monthly pace set in the previous several years. The equal-weighted U.S. Composite Index rose 1.1% and the value-weighted U.S. Composite Index advanced 1.2% in May 2016, placing the value-weighted index at its highest level this cycle.
- HEALTHY CRE SPACE ABSORPTION CONTRIBUTED TO STRONG PRICE GAINS. Demonstrating the overall demand for CRE space, net absorption across the three major property types—office, retail and industrial—is projected to total 688.5 million square feet for the 12-month period ending in June 2016, a 9.5% increase from the same period ending in June 2015. Supporting the extension of the pricing recovery across the entire building size and quality spectrum, the general commercial segment, which reflects the performance of smaller properties, had the strongest rate of growth in absorption over the past year, with total net absorption projected to grow 28% in the 12-month period ending in June 2016. Net absorption in the investment-grade segment is expected to expand by 1.5% in the same period.
- TRANSACTION VOLUME CONTINUES TO TREND BELOW RECORD-SETTING PACE SET IN 2015. Reflecting the broader financial market volatility from earlier in the year, transaction volume remains lower than last year's record-setting pace. Composite pair volume of $41.9 billion year-to-date through May 2016 was down 13.7% compared to the same period one year earlier. The slowdown was particularly noticeable in the investment-grade segment of the market. Transaction volume was down 17.4% in the investment-grade segment, compared to 6.0% in the general commercial segment in the first five months of 2016 compared to the same period in 2015.
Monthly CCRSI Results, Data Through May 2016
|1 Month Earlier||1 Quarter Earlier||1 Year Earlier||Trough to Current|
|Value-Weighted U.S. Composite Index||1.2||%||0.5||%||2.2||%||77.7%1|
|Equal-Weighted U.S. Composite Index||1.1||%||0.3||%||6.7||%||48.9%2|
|U.S. Investment-Grade Index||-0.7||%||1.9||%||3.3||%||66.6%3|
|U.S. General Commercial Index||1.4||%||0.0||%||7.3||%||46.5%4|
|1 Trough Date: January 2010 2 Trough Date: March 2011 3 Trough Date: March 2010 4 Trough Date: March 2011|
CRE Market Fundamentals Data Through June 2016
|Annual Net Absorption (in millions of square feet)|
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, and 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 once, 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.
Several charts accompanying this release are available at http://www.globenewswire.com/NewsRoom/AttachmentNg/6bf5a918-7b22-4021-a5d2-29ba6c66aa2b.
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 10 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 a proven platform for marketing their properties. Through an exclusive partnership with Move, a subsidiary of News Corporation, Apartments.com is the exclusive provider of apartment community listings across Move's family of websites, which include realtor.com®, doorsteps.com and move.com. 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 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, including trends related to transaction volume, investor demand, absorption and price growth, will not continue or produce the results suggested by such trends, and the risk that actual net absorption for the property types and segments identified in the release will not be as projected for the periods set forth in the 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, 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 those filings, as well as CoStar'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.