CoStar Pricing Indices Point to Consistent Commercial Real Estate Pricing Growth and Improving Investor Sentiment
March 15 2012 - 4:04PM
This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides
the market's first look at January 2012 commercial real estate
pricing. Based on 631 repeat sales in January and more than 100,000
repeat sales since 1996, the CCRSI offers the broadest measure of
commercial real estate repeat sales activity. Also, in this release
CoStar introduces three new metrics on market liquidity: average
sale price-to-asking price ratio, average days on market and the
sales withdrawal rate.
January 2012 National Results Highlights
- The monthly CCRSI National Composite Index increased by 1.5% in
January 2012. The index is now 1.9% above the same period last
year, reflecting the ongoing recovery in commercial real estate
fundamentals.
- The National Composite Index has posted gains in eight of the
last nine months (since April 2011) with an average monthly
increase of 0.8%. This suggests that investor sentiment is
improving and pricing growth is gaining consistency.
- While economic growth is becoming more entrenched, pricing for
commercial real estate remains low relative to recent history. The
National Composite Index ended January 2012 down 31.9% from its
previous peak in August 2007.
- The CCRSI National Investment Grade Index increased 3.7% over
year-ago levels, bolstered by strong investor interest in coastal
markets and core multifamily assets.
- Liquidity in the commercial real estate markets is improving
resulting in more property sales. The number of observed trades
over the last 12 months increased by 23% over the prior 12-month
period. Importantly for the pricing indices, the number of
non-distressed sales observations increased at three times the rate
of distressed sales observations over that period.
- The distress sale percentage of total observed transaction
volume fell from 30.1% in January 2011 to 21.1% in January 2012.
Rising occupancies have helped stabilize net operating income (NOI)
for property owners across a number of markets, leading to a
reduction in the number of forced sales. This trend has been a
positive force for commercial real estate pricing.
- Consistent with the positive pricing trends, the gap between
asking and actual sale prices closed by more than 1% over the past
year. However, buyers and sellers still remain far apart based on
historical levels. In January 2012, average sale price-to-asking
price ratio was still 7.4% lower than the peak of the market in
2007.
- The average number of days on market (DOM) has grown from
approximately 250 days in 2007 and remained at a record high of
approximately 420 days over the three-month period of November 2011
– January 2012, suggesting a high level of inefficiency and
friction in the process of matching potential buyers and sellers.
This extended sales period intensifies uncertainty and puts
downward pressure on asset prices. It also provides insight on why
overall price recovery has lagged the recovery in transaction
volume.
- The number of properties withdrawn from the sales market by
discouraged sellers is leveling off. In January 2012, the number of
properties withdrawn from the market declined 12.7% since the same
period last year, another indication of improving investment
sentiment.
A chart accompanying this release is available at
http://media.globenewswire.com/cache/9473/file/12919.pdf
About the CoStar Commercial Repeat-Sale
Indices
The CoStar Commercial Repeat-Sale Indices (CCRSI) are the most
comprehensive and accurate measures of commercial real estate
prices in the United States. In addition to the national Composite
Index, 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 10 largest metropolitan 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/12920.pdf
Contact:
For more information about CCRSI Indices, including our legal
notices and disclaimer, please visit
http://www.costar.com/ccrsi.
ABOUT COSTAR GROUP, INC.
CoStar Group (Nasdaq:CSGP) is commercial real estate's leading
provider of information and analytic services. 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.
Headquartered in Washington, DC, CoStar maintains offices
throughout the U.S. and in Europe with a staff of approximately
1,500 worldwide, including the industry's largest professional
research organization. For more information, visit
http://www.costar.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 subject to many risks and
uncertainties that could cause actual results to differ materially
from these statements. 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 CoStar's Form
10-K for the year ended December 31, 2011, and CoStar's Form 10-Q
for the quarter ended September 30, 2011, under the heading "Risk
Factors." In addition to these statements, there can be no
assurance that there will continue to be an ongoing recovery in the
U.S. commercial real estate market; that investor sentiment is
improving and pricing growth is gaining consistency; that liquidity
in the commercial real estate markets will continue to improve and
to result in more property sales; that investor demand and
commercial real estate pricing levels will continue at the levels
or with the trends indicated in this release; that the trends
represented or implied by the indices will continue; and that the
CCRSI will be released on the date and updated on the frequency set
forth in the release. 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: Richard Simonelli
(202) 346-6394
rsimonelli@costar.com
CoStar (NASDAQ:CSGP)
Historical Stock Chart
From May 2024 to Jun 2024
CoStar (NASDAQ:CSGP)
Historical Stock Chart
From Jun 2023 to Jun 2024