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Latest CoStar Commercial Repeat Sale Analysis: Property Price Gains In April Strongest At High End Of Market

WASHINGTON, June 11, 2014 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at April 2014 commercial real estate pricing. Based on 1,148 repeat sales in April 2014 and more than 125,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.

CCRSI National Results Highlights, Data through April of 2014
  • HIGH-END CRE PROPERTIES ENJOY BIGGEST PRICING GAINS IN APRIL: Bolstered by continued demand for large, core properties, the value-weighted U.S. Composite Index advanced by 2% in April 2014, while the equal-weighted U.S. Composite Index, which is more heavily influenced by smaller, second-tier properties, declined by 0.8% for the same month. In particular, average sale prices for core multifamily and office properties in major markets have soared well above their 2006–07 average as investors continued to aggressively pursue those types of properties. This investment activity is reflected in the value-weighted U.S. Composite Index, which has recovered to within 2.2% of its prior peak level in September of 2007, while the equal-weighted U.S. Composite Index sits 21.9% below its prior peak.  
  • GENERAL COMMERCIAL SEGMENT REMAINS ON UPWARD TRAJECTORY DESPITE RECENT PRICE VOLATILITY: The equal-weighted U.S. Composite Index's General Commercial segment declined by 1% in April 2014. Despite the volatility in the monthly data, the overriding trend over the past 12 months for this segment has been outsized pricing gains as capital expanded into secondary markets. The 13.2% year-over-year increase in April 2014 was the largest such gain among the four major indices.   
  • INCREASED INVESTMENT ACTIVITY REFLECTS HEALTHY MARKET FOR TRANSACTIONS: Repeat sales transaction volume year-to-date through April 2014 increased 25% from the same period in 2013, and is approaching 2006 transactions levels.   
  • PRICE GAP BETWEEN BUYERS AND SELLERS CONTINUES TO NARROW: The delta between sale prices and asking prices closed by more than one percentage point in the 12-month period ended in April 2014. This gauge of liquidity varies by region and property type, however. In the West region, sellers are achieving over 90% of asking prices, while in the Midwest this ratio is 82%, the lowest of the four regions. Multifamily properties are driving much of this improvement in liquidity. In the core coastal markets of Los Angeles, San Francisco, Boston and New York, for example, multifamily sale prices relative to asking prices are back to, or above, 2006-07 peak levels.  
  • OTHER LIQUIDITY MEASURES ALSO IMPROVE: The average time on market for for-sale properties fell 3% in the 12 months ending in April 2014, and the share of properties withdrawn from the market by discouraged sellers declined by more than two percentage points during the same period.  
  • DISTRESS SALES CONTINUE TO DISSIPATE: As market fundamentals and liquidity have improved, the distress percentage of total observed sale pair counts declined to just 10.6% through the first four months of 2014, down from 16.6% for the same timeframe in 2013 and down 32% from the bottom of the market in 2010.
Monthly CCRSI Results, Data through April of 2014        
  1 Month Earlier 1 Quarter Earlier 1 Year Earlier Trough to Current
Value-Weighted U.S. Composite Index 2.0% 2.8% 12.9% 58.5% 1
Equal-Weighted U.S. Composite Index -0.8% 1.6% 12.8% 22.7% 2
U.S. Investment Grade Index 0.3% 4.4% 9.5% 37.8% 3
U.S. General Commercial Index -1.0% 1.1% 13.2% 20.1% 4
1 Trough Date: January 2010  2 Trough Date: March 2011  3 Trough Date: October 2009  4 Trough Date: March 2011
  Monthly Liquidity Indicators, Data through April of 2014 1        
  Current 1 Month Earlier 1 Quarter Earlier 1 Year Earlier
Days on Market 417 418 419 429
Sale Price-to-Asking Price Ratio 88.8% 88.7% 88.2% 87.4%
 Withdrawal Rate 40.4% 40.7% 41.0% 42.7%
1 Average days on market and sale-price-to-asking-price ratio are both calculated based on listings that are closed and confirmed by CoStar's research team. The withdrawal rate is the ratio of listings withdrawn from the market by the seller to all listings for a given month.         

Several charts accompanying this release are available at 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, 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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