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Trends In Latest CoStar Composite Price Index Hold Steady As Property Prices Continue Upward Climb

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Robust Annual Space Absorption And Capital Flows Support Growth

WASHINGTON, Dec. 28, 2016 /PRNewswire/ -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at commercial real estate pricing trends through November 2016. Based on 1,120 repeat sale pairs in November 2016 and more than 170,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.

U.S. Composite Indices: Equal- And Value-Weighted, Data Through November 2016

U.S. Equal-Weighted Indices By Market Segment, Data Through November 2016

U.S. Pair Count, Data Through November 2016     U.S. Pair Volume, Data Through November 2016

U.S. Distress Sale Pairs Percentage, Data Through November 2016

Market Fundamentals, Data Through December 2016

CCRSI National Results Highlights 

  • PRICE INDICES ADVANCE IN NOVEMBER AS COMMERCIAL PROPERTY SALES POST STEADY GAINS. Both of CCRSI's two major composite price indices advanced by more than 1% in the month of November, an acceleration in the pace of growth from the monthly average growth rate of 0.7% from January 2016 through October 2016. The equal-weighted U.S. Composite Index rose 1.1% in November 2016 and is now 3.2% above its prerecession peak.  Meanwhile the value-weighted U.S. Composite Index advanced 1.3% in November 2016, placing it nearly 28% above its prerecession high.
  • STRONG ANNUAL SPACE ABSORPTION ACROSS THREE MAJOR CRE PROPERTY TYPES CONTRIBUTING TO PRICE GAINS. Demonstrating the overall demand for commercial property space, net absorption across the three major property types—office, retail and industrial—is projected to total nearly 680 million square feet for the 12-month period ending in December 2016, a 1.5% increase from the same period ending in December 2015. Demand from tenants leasing space has supported the extension of the pricing recovery. The general commercial segment, which reflects the performance of smaller properties, had the strongest rate of growth in absorption over the 12-month period ending in December 2016, with total net absorption projected to grow 22.1% in the 12-month period ending in December 2016. Meanwhile, net absorption in the investment-grade segment is expected to decrease 7.6% in the same period.
  • TRANSACTION VOLUME ON PACE WITH RECORD LEVEL IN 2015. The CCRSI composite pair volume trailed last year's pace through much of 2016, likely reflecting broader financial market volatility from earlier in the year.  However, sales activity picked up in November 2016, resulting in composite sale volume of $113.3 billion year-to-date through November 2016, an increase of 0.8% compared to the same period one year earlier.

Monthly CCRSI Results, Data Through November 2016


1 Month Earlier

1 Quarter Earlier

1 Year Earlier

Trough to Current

Value-Weighted U.S. Composite Index

1.3%

1.8%

8.8%

103.9%1

Equal-Weighted U.S. Composite Index

1.1%

3.8%

8.1%

61.0%2

U.S. Investment-Grade Index

0.8%

3.6%

1.8%

66.3%3

U.S. General Commercial Index

1.1%

3.9%

9.2%

60.9%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 December 2016 


Annual Net Absorption (in millions of SF)

2013Q4


2014Q4


2015Q4


2016Q4


Aggregate

432.7


599.6


669.4


679.2


Investment Grade

298.6


396.7


464.5


429.0


General Commercial 

134.1


202.9


204.9


250.2


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.

For more information about the CCRSI Indices, including the full accompanying data set and research methodology, legal notices and disclaimer, please visit http://www.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 nearly 25 million unique monthly visitors in aggregate in the third quarter of 2016. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of approximately 2,800 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 trends related to commercial real estate fundamentals, price growth, absorption, capital flows and tenant demand; the risk that net absorption across the three major property types will not be as expected for the 12-month period ending December 2016; the risk that rate of growth in absorption in the general commercial segment will not be as expected for the 12-month period ending December 2016; the risk that decline in net absorption in the investment-grade segment will not be as expected for the 12-month period ending December 2016; and the risk that transaction volume 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 CoStar's Quarterly Report on Form 10-Q for the quarter ended September 30, 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 or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

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SOURCE CoStar Group, Inc.

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