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Latest CoStar Commercial Repeat-Sale Analysis: Commercial Property Prices Show Little Movement In October Amid Economic Uncertainty

WASHINGTON, Dec. 12, 2012 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provide the market's first look at October 2012 commercial real estate pricing. Based on 927 repeat sales in October and more than 100,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.

October 2012 CCRSI National Results Highlights

  • OCTOBER PRICES SHOW LITTLE MOVEMENT: The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the equal-weighted U.S. Composite Index and the value-weighted U.S. Composite Index—saw very little change in the month of October 2012, dipping -0.1% and -0.8%, respectively, although both improved over quarter and year-ago levels. Recent pricing fluctuations likely signify a more cautious attitude among investors stemming from uncertainty over U.S. fiscal policy heading into 2013.  
  • VALUE-WEIGHTED INDEX LIFTED BY MULTIFAMILY SECTOR: The U.S. Value-Weighted Composite Index, which weights each repeat-sale by transaction size or value (and therefore is heavily influenced by larger transactions), fell slightly in October 2012, but this dip in pricing masks differences below the surface. The multifamily component of the index posted strong gains for the month, indicating continued investor interest in that property type as a safe haven investment. Meanwhile, pricing for other property sectors served as a drag on the overall value-weighted index.  
  • WITHIN THE EQUAL-WEIGHTED INDEX, INVESTMENT GRADE SEGMENT CONTINUES TO BENEFIT FROM SEASONAL SURGE: October prices were up 15.8% in a quarterly comparison of the U.S. Investment Grade Index, reflecting a seasonal pricing pattern observed over the last several years in which investment-grade transaction activity tends to spike during the last few months of the year. In past years, the CCRSI Investment Grade index gave back some of those gains in the first quarter of the following year as deal volume slowed, a pattern expected to repeat itself in 2013.  
  • LIQUIDITY INDICATORS ARE IMPROVING: The average time on market for for-sale properties fell 5.5% from the peak in the second quarter of 2012. Similarly, the gap between initial asking and final sales price has closed by almost 2% from year-ago levels. Fewer properties withdrawn from the market by discouraged sellers is another indication of improving investor sentiment. The number of properties withdrawn from the market in October 2012 declined 7.4% from the prior year.  
  • DISTRESS LEVELS SEE SUBSTANTIAL DECLINE: The number of distressed property trades in October fell to 14.8%, the lowest level witnessed since the first quarter of 2009. This reduction in distressed deal volume should result in higher, more consistent pricing, and lead to enhanced market liquidity, giving lenders more confidence to finance deals.

Several charts accompanying this release are available at http://media.globenewswire.com/cache/9473/file/17193.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 (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).

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