costar commercial repeat sales index - march 2011

8/7/2019 CoStar Commercial Repeat Sales Index - March 2011

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COSTAR COMMERCIAL REPEAT-SALE INDICES March 2011 Release (With Data through January 2011)

MARCH 2011 RELEASE (With Data through January 2011)www.costar.com/ccrsi

INVESTMENT GRADE PROPERTIES POSTLARGEST YEAR OVER YEAR GAIN SINCE 2006

The Investment Grade Index in the most recent CoStar Commercial Repeat-Sale Indices (CCRSI) is up10.6% versus the same period last year even after a slight decline in January 2011.

The Investment Grade pair count (total number of repeat sales) is up 54% year over year, a substantialincrease.

The increase in Investment Grade repeat sales transactions reflects trends in the broader market. CoStartracked more than $211 billion in total sale transactions in 2010. This is a 79% increase over 2009 sales

volume for all sales. While the market is clearly recovering sales transaction volume still remains 63% below

the markets recent peak volume level.

CoStars General Grade Index is down 11.3% versus the same period last year, reflecting continueddownward pressure on general commercial property values. It did, however, start 2011 on a slight up-note,

increasing 0.4% for the first month of 2011. After being down for the past three months at -2.4% and down -

11.3% for the past year, the smaller property index may be seeing the specter of bottom for the first time in

the past three years.

The General Grade pair count is down 1% over the year-ago level. We expect pair counts will increaseslightly as additional closings are recorded.

The Composite Index, which is an equal weighted analysis of both the Investment Grade and General Gradeindices and a reflection of the broad overall market, was flat the first month of 2011, down -2.6% for the past

three months and down -6.6% for the past 12 months.


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National Composite Monthly Indices Through January 31, 2011

50

75

100

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175

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225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201

In

dexValue(20004q=100)

Composite Index Investment Grade Index General Commercial Index

Comparison Table for Current Release (ending 1/31/2011)

1 MONTHEARLIER

1 QUARTEREARLIER

1 YEAREARLIER

FROM PEAK

National All Property Type Composite -0.1% -2.6% -6.6% -30.7% from Aug 2007

National Investment Grade -1.1% -2.3% 10.6% -33.3% from June 2007

National General All Property 0.4% -2.4% -11.3% -29.8% from Aug 2007


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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.

The CoStar indices are constructed using a repeat-sale methodology, widely considered as the most accurate way

to measure price changes for real estate. The repeat-sale methodology measures the movement in the prices of

commercial properties by collecting data on the actual sales prices that occur when a property sells. When a property

is sold more than one time, a sale pair is created. The prices from the first and second sale are then used to calculate

price movement for the property. By aggregating all the price changes from all of the sale pairs, a price index is

created.

COMMENTARY ON DATA

We wish to point out a one-time change in the methodology used effective this month. The quarterly indices and

approach has not changed but the monthly numbers are now based on a two-stage/frequency-conversion of rotating

quarter procedure, which is slightly less noisy than direct monthly estimates.

The CCRSI March 2011 report is based on data through the end of January 2011. In January of 2011, 483 pair

sales were recorded compared to 434 in the same month of 2010. Note that is an increase of 11% compared to the

prior year, and we expect to see pair volume running closer to 20% ahead of January 2010 as additional sales from

that period are confirmed and added, in line with the 22% higher volume we observed in December of 2010 versus

December of 2009.

The Investment Grade pair count is up 54% over last year at this time while the General Grade pair count is down

just a single percent. As previously mentioned, the pair counts for both will likely increase slightly when the additional

closings are recorded.

Distress sales as a percent of the total increased in each of the four quarters in 2010 with an increase of just over

20% in the fourth quarter and an increase of 18.5% for all of 2010. By property type, the highest percentage of

distress in the fourth quarter was found in the Hospitality sector at 36%, followed by Multifamily at 24%, Office at 21%

and Industrial and Retail both near 19%. It is clear from our analysis that the amount of distressed commercial

property has not peaked and will continue to affect the pricing indices provided here.

We provide one graph below showing the sales counts and a second showing dollar volume. Note that by

transaction count the General Grade Index sales accounted for 68% of the total sales transaction count in January.

By volume in January properties in the Investment Grade Index represented 78% of total volume. The average deal

size within Investment Grade was $10.5 million in January down from nearly $16 million in December and more in line

with long-term averages. The average dollar size for the General Grade Index was $1.4 million in January compared

to $1.6 million in December.


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Number of Repeat Sale Transactions by Count

Dollar Volume of Repeat Sales for General and Investment Grade

0

200

400

600

800

1000

1200

1400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

NumberofSalesPairs

General counts Investment Grade Count

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Millions

Investment Grade Volume General Volume


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National CompositeCRE Price Index

National Indices byProduct Type*

RegionalIndices*

Regional Indices byProperty Type

Top Ten MetroMarket Indices by

Property Type

General Commercial Office NortheastNortheast:

Office, Multifamily,Industrial, Retail

Office

All Retail MidwestMidwest:


Multifamily

Investment Grade Industrial SouthSouth:


Industrial

Multifamily West

West:

Office, Multifamily,Industrial, Retail Retail


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Top 10 Office Metro Areas Top 10 Industrial Metro Areas

# CBSA # CBSA

1 New York 1 Los Angeles

2 Los Angeles 2 New York

3 Washington 3 Chicago

4 Chicago 4 Dallas-Fort Worth

5 Dallas-Fort Worth 5 Atlanta

6 Boston 6 Detroit

7 San Francisco 7 Riverside

8 Atlanta 8 Houston

9 Philadelphia 9 Philadelphia

10 Houston 10 Miami-Fort Lauderdale

Top 10 Retail Metro Areas Top 10 Multifamily Metro Areas

# CBSA # CBSA

1 New York 1 New York

2 Los Angeles 2 Los Angeles

3 Chicago 3 Chicago

4 Dallas-Fort Worth 4 Dallas-Fort Worth

5 Miami-Fort Lauderdale 5 Washington

6 Atlanta 6 Houston

7 Houston 7 Boston

8 Philadelphia 8 Atlanta

9 Washington 9 Seattle

10 San Francisco 10 Philadelphia


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National Property Type Quarterly Indices Through December of 2010

U.S. Regional Quarterly Indices Through December of 2010

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225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

IndexValue(20004q=100

)

U.S.Office U.S.Industrial U.S.Retail U.S.Multifamily

25

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100

125

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225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

IndexValue(20004q=100)

South Composite Northeast Composite Midwest Composite West Composite


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Office Top 10 Metros Quarterly Indices

Industrial Top 10 Metros Quarterly Indices

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125

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225

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


U.S. Office Top 10 Office Metros

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225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

In

dexValue(20004q=100)

Top 10 Industrial Metros U.S. Industrial


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Retail Top 10 Metros Quarterly Indices

Multifamily Top 10 Metros Quarterly Indices

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125

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175

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225

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Top 10 Retail Metros U.S. Retail

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100

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275

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Inde

xValue(20004q=100)

Top 10 Multifamily Metros U.S. Multifamily


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U.S. West Property Type Quarterly Indices

U.S. South Property Type Quarterly Indices

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250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


West Office West Industrial West Retail West Multifamily

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225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


South Office South Industrial South Retail South Multifamily


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U.S. Midwest Property Type Quarterly Indices

U.S. Northeast Property Type Quarterly Indices

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200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


0)

Midwest Office Midwest Industrial Midwest Retail Midwest Multifamily

75

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125

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225

250

275

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


)

Northeast Office Northeast Industrial Northeast Retail Northeast Multifamily


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CONTACT:

Media Economist

Chris MackeSenior Real Estate [email protected]

Analysis

Dr. Norm MillerVice President of [email protected]

For more information about CCRSI Indices, including our legal notices and disclaimer, please visithttp://www.costar.com/ccrsi .

ABOUT COSTAR GROUP, INC.

CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of information, analytic and marketing services. Founded

in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of

commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on

commercial property values, market conditions and current availabilities. Headquartered in Washington, DC, CoStar maintains offices

throughout the U.S. and in Europe with a staff of approximately 1,500 worldwide, including the industry's largest professiona

research organization. For more information, visit http://www.costar.com.

This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's expectations, beliefs, intentions

or strategies regarding the future. These statements are subject to many risks and uncertainties that could cause actual results to differ materially

from these statements. More information about potential factors that could cause actual results to differ materially from those discussed in the forwardlooking statements include, but are not limited to, those stated in CoStar's filings from time to time with the Securities and Exchange Commission

including CoStar's Form 10-K for the year ended December 31, 2010, under the heading "Risk Factors." In addition to these statements, there can be

no assurance that there will be continued downward pressure on general commercial property values; that the smaller property index is seeing the

specter of bottom for the first time in the past three years; that pair counts will increase slightly as additional closings are recorded; that pair volume

will run closer to 20% ahead of January 2010 as additional sales from that period are confirmed and added; that the amount of distressed commercia

property will continue to affect the pricing indices provided in this release and that the trends represented or implied by the indices will continue. A

forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such

statements.

costar commercial repeat sales index - march 2011

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