News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
CoStar Repeat Sale Analysis: Strong CRE Demand Powers Expanding Commercial Property Price Recovery
Randyl Drummer / CoStar / July 17, 2013
‘Across the Board Improvement’ is Prevailing Theme for CRE Pricing, Sales Volume, Fundamentals in May
Pricing of commercial real estate strengthened across the board, with pricing gains accelerating in May following a seasonal soft patch in the early months of 2013, reflecting solid market fundamentals, broadening investment activity and healthy demand for virtually all types of commercial properties, according to the latest CoStar Commercial Repeat Sale Indices (CCRSI) release.
The value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index — the two broadest measures of aggregate pricing for commercial properties within the CCRSI — increased by 0.7% and 2%, respectively, in May, noted CCRSI index author, Dr. Ruijue Peng of CoStar’s Property and Portfolio Research.
The value-weighted index, which is heavily influenced by larger transactions and typically tracks with high quality core real estate prices, has now increased by 41% from its most recent trough in 2010. The equal-weighted index, which is influenced by smaller, more numerous opportunistic transactions, has improved by 10% from its bottom in 2011.
The Investment Grade index measuring repeat sales of higher- and middle-quality assets reached its highest level in more than four years in May. Within the equal-weighted U.S. Composite Index, the investment grade segment shook off the seasonal slump of the previous months and jumped by 2.6%.
Upper-middle tier properties have now recovered by 24.6% since prices for investment-grade property reached their trough in October 2009.