A new release of CoStar Group data through December 2024 has revealed quarter-over-quarter price gains in CRE. They vary by deal size, geography, and property type is more evidence of improving markets. While the price indices fell some month-over-month, year-over-year things remain “intact," the CRE analytics firm said.
This report is based on 1,710 repeat sale pairs in December 2024 and 317,677 repeat sales since 1996. Repeat sales are an important tool because they establish comparable values at different times.
The composite price indices fell some in December, month-over-month. The value-weighted index, more influenced by high-value trades in core markets, fell by 1.3% between November and December, falling to 245 for the first time in five months. The index was off 3.1% over the previous 12 months and 18.4% below the July 2022 historical high.
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The equal-weighted composite, which has a broader set of properties and greater participation of lower-priced ones, was down 1.4% to 317 in December. But it was up 2.8% year-over-year and 0.7% over the September 2023 recent high.
Even with the overall trend, the year-over-year equal-weighted measure was positive and the value-weighted index declines are slower than in 2024 Q3.
“When we look at a value-weighted number, basically bigger properties in larger markets, the last quarterly trend that was positive was the second quarter of 2022,” Chad Littell, CoStar national director of U.S. capital markets, told GlobeSt.com earlier this week. “By the second quarter of 2023, we were already negative 15% year over year, then in 2024 we were [negative] 29% year over year. For value-add office, it’s about 45% from the all-time high. There are some properties down 15%, there are some down 80% or 90%.”
Composite pair volume during calendar 2024 hit $114.9 billion, 15.6% higher than 2023. The biggest jump was in investment grade, up 25.1% in 2024 over 2023. That was 64.3% of all transactions during the period. General commercial was 35.7% of the total volume but grew only 3.7% to $45.9 billion.
Value-weighted prices — again, more influenced by high-dollar properties — led in 2024 Q4. Overall, prices were flat to down, but the value-weighted segments showed quarterly increases. Retail and multifamily were up 2.3% and 2% respectively in this category.
Industrial prices were close to flat quarter-to-quarter, up 0.3%, but up 2.9% through the previous 12 months. Value-weighted industrials were up 0.6% over November and 3.4% year-over-year. Prime industrial markets were 2.2% higher, year over year.
Multifamily prices in the equal-weighted segment were flat. The year-over-year price decline slowed to 4.1% in the 12 months ending December 2024. Value-weighted multifamily was up 2% over November and saw year-over-year value declines slow to 4.2%. Prime multifamily gained 2.7% quarter-over-quarter but was down 6.5% year-over-year for the same period.
Office equal-weight price declines were down to -1.9% from November and -2.7% year-over-year. Losses were down from the historical high of -9.7% in June 2022. In value-weighted, prices were up 0.2% in the quarter but down 13.4% year-over-year. Prime office saw equal-weighted down 2.7% quarter-over-quarter and down 1.5% year-over-year.
Equal-weighted retail fell 0.2% quarter-over-quarter and was flat year-over-year. Prime retail was down 2.6% month-over-month and down 0.5% year-over-year. Value-weighted retail prices were up 2.3% over November from 12 months prior.
In regional splits, the South saw negative price changes across the four major property types. Multifamily lost 3.9% but the rest experienced price increases year-over-year.
In the Northeast, equal-weighted lost 2.4% of value quarter-over-quarter and was down 0.3% year-over-year. Value-weighted was 1% up in the fourth quarter but down 15.3% compared to December 2023.
Equal-weighted was down 0.8% in the Midwest; value-weighted lost 5.5% of its value year-over-year. The value-weighted cohort was off by 1.4% and off by 5.5% from the previous year.
And in the West, equal-weighted was down 0.3% and 2.1% over the same period the prior year. Value-weighted was up 1.8% but down 3.6% year-over-year.
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