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Washington, DC Leads All U.S. Markets In Pricing Recovery With 15% Increase In CoStar's Commercial Real Estate Repeat Sales Index -- Largest Gain In Nation

  • Washington, DC continued its frontrunner status among major U.S. markets in leading the commercial real estate pricing recovery, ending 2010 with a 5% increase in the fourth quarter of 2010. Commercial property pricing in the Washington, DC market gained 15% for the full year of 2010 and have gained 19% since its market low. 
  • After three consecutive quarters of pricing increases, commercial property pricing in New York registered a 2% decline in the fourth quarter of 2010. New York commercial property pricing has increased 6% above its market low.
  • Chicago, San Francisco and Atlanta all experienced declines in pricing as the commercial property values in those markets continue to search for a pricing bottom. Los Angeles had its first pricing increase in the fourth quarter, albeit 1%, the first increase in that market since the first quarter of 2008.
  • At the national level, CoStar's Investment Grade Repeat-Sale Index was up nearly 7% for the month of December continuing the see-saw pattern observed with oscillating monthly pricing data, resulting in a slight positive quarter. While still below the pricing index from two years ago by 20%, the investment grade property index finished 2010 with a strong positive 8% climb for the year. From its peak in July 2007, the Investment Grade pricing index is down 34.1%, with the trough occurring in January 2010 when the Index was down 40%.
  • CoStar's General Grade Repeat Sales Index continues to search for a bottom as it slipped just under 1% for the month of December. The pricing index for General Grade commercial real estate lost 8.2% for the quarter and 11% for the year, and declined nearly 23% in the past two years.
  • The strong performance of the Investment Grade index was enough to lift the U.S. national Composite Index, which is an equal-weighted repeat sales analysis of all commercial real estate sales, with two thirds of the transaction count contained within the General Index. The Composite Index was up 1.8% for the month, down 5.8% for the quarter and down 6.3% for the year. Overall the Composite Index is down 22% over the past two years.
  • For the full quarter ending in December 2010, we saw declines across all property type indices when using the composite that includes all property sizes with industrial and retail down nearly 10%, office off 7% and multifamily off nearly 2%. Multifamily was the only composite index that was up for the year with a 3% gain. When analyzed separately by general and investment grade we see higher priced quality properties moving strongly in a positive direction.
  • By property type, pricing for commercial property sales in the top ten largest markets is recovering much stronger than the general market with the exception of retail.
  • In the West region, all property types are down in recent quarters except for Retail, which is stabilizing. In the South, only Multifamily pricing is up significantly. In the Midwest all property types are down especially office. In the Northeast, average pricing for Multifamily is up strongly with Industrial and Office pricing stabilizing.

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, there are a total of 32 sub-indices in the CoStar index family. The sub-indices include breakdowns by property sector (office, industrial, retail, multifamily 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 national composite index is produced on a monthly basis.

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