Latest CoStar CCRSI Analysis: Commercial Real Estate Prices Shake Off Effects Of First Quarter Seasonal Slowdown With Strong Showing In April

WASHINGTON, June 12, 2013 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provide the market's first look at April 2013 commercial real estate pricing. Based on 1,045 repeat sales in April 2013 and more than 125,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.

April 2013 CCRSI National Results Highlights
  • COMMERCIAL REAL ESTATE PRICE RECOVERY REGAINED MOMENTUM IN APRIL: As the effects of the first quarter seasonal slowdown in investment activity subsided, commercial real estate prices advanced across the board in April 2013. 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—each posted solid monthly gains in April of 1.9% and 1.1%, respectively, which reflects improvement in market fundamentals across the major CRE property types. The two components of the equal-weighted U.S. Composite Index (the Investment Grade and General Commercial indices) also made substantial gains in April 2013, signifying an extension of the recovery in commercial property pricing to more secondary property types and markets.  
  • INVESTMENT GRADE SEGMENT POSTS STRONG MONTHLY GAIN: Within the equal-weighted index, the Investment Grade segment of the market surged ahead by 4.1% in April 2013, more than offsetting the losses from the first quarter of 2013, and closing the month 1% above pricing levels for this segment in December 2012. The office, retail and warehouse sectors drove the strongest gains in the Investment Grade segment, indicating the price recovery has expanded beyond the multifamily sector. Prices for multifamily property, which were the first to rise coming out of the downturn, have stagnated recently as rising construction and near-peak pricing in primary markets have taken a toll on overall pricing gains. The General Commercial Index also posted positive gains in April 2013, albeit less pronounced than its Investment Grade counterpart.  
  • LIQUIDITY INDICATORS ALSO IMPROVING: Transaction volume of repeat sales increased 25% from the average over the first three months of 2013 to $5.1 billion in April 2013. Meanwhile, the average time on market for commercial properties listed for sale fell 5.1% in April 2013 from its peak one year ago, and the gap between initial asking and final sales price has narrowed by almost 2.2% from year-ago levels. Also, the fewer number of properties withdrawn from the market by discouraged sellers is another indication of improving investor sentiment. The number of properties withdrawn from the market in April 2013 declined 5.8% from the prior year. The improvement indicates a virtuous cycle necessary for sustained recovery. As the pricing recovery encourages lending and capital inflows, a more liquid and efficient market is expected to support further advances in pricing.  
  • DISTRESS SALES FALL TO LOWEST LEVEL SINCE 2008: The percentage of commercial property selling at distressed prices tumbled to 13.2% in April 2013, 64% lower than the peak level observed in March 2011. This reduction in distressed deal volume has supported higher, more consistent pricing and enhanced market liquidity by giving buyers greater confidence to do deals.  
  • Monthly CCRSI Results, Data through April of 2013
  1 Month Earlier 1 Quarter Earlier 1 Year Earlier Trough to Current
Value-Weighted U.S. Composite Index 1.1% 1.8% 10.8% 40.9% 1
Equal-Weighted U.S. Composite Index 1.9% -0.2% 6.3% 8.0% 2
 U.S. Investment Grade Index 4.1% 3.4% 8.5% 19.7% 3
 U.S. General Commercial Index 1.7% -0.8% 5.8% 6.9% 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 2013 1         
  Current 1 Month Earlier 1 Quarter Earlier 1 Year Earlier
Days on Market 415 408 428 432
Sale Price-to-Asking Price Ratio 87.4% 87.1% 86.4% 85.3%
Withdrawal Rate 41.1% 41.6% 43.2% 46.9%
         
1 Average days on market and sale price-to-asking price ratio are both calculated based on listings that are closed and confirmed by the CoStar research team. Withdrawal rate is the ratio of listings that are withdrawn from the market by the seller relative to all listings for a given month.         

A chart accompanying this release is available at http://media.globenewswire.com/cache/9473/file/20255.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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