Pricing Recovery Expands from Core Assets

WASHINGTON, DC—US commercial property values rose broadly in October, notwithstanding a flattening in the top tier of the market, CoStar Group said Wednesday afternoon. Data from this month's CoStar Commercial Repeat Sale Indices also indicate that although January-to-October transaction volume was off 2.5% from the year-ago period, it still ranked as the second highest in the CCRSI's history.

CoStar says its value-weighted US Composite Index, reflecting larger asset sales common in core markets, was flat in the month of October, while up 8.2% on a year-over-year basis. The equal-weighted US Composite Index, which gives greater emphasis to the more numerous but lower-priced property sales occurring in secondary and tertiary markets, advanced by 1.4% in October, while posting a similar annual gain of 7.8%.

Similarly, pricing trends in the two sub-indices of the equal-weighted Composite Index mirrored the larger trends. The General Commercial segment, which is influenced by smaller, lower-priced properties, increased 1.4% month over month in October 2016 and 8.8% Y-O-Y. The higher-value Investment-Grade sub-indice rose 1.4% in October, in line with the 1.6% average monthly increase seen over the past 12 months. “The recent momentum in the General Commercial segment demonstrates the breadth of the pricing recovery,” according to CoStar.

If transaction volume is down on a Y-O-Y basis, then other metrics reported by CoStar are moving in a positive direction as far as sellers are concerned. The average time that for-sale properties spend on the market dropped from 345 days a year ago to 288 in October, a 17.8% annual decline.

The sale-price-to-asking-price ratio narrowed by 2.9 percentage points from 93.5% a year ago to 96.4%, the tightest this ratio has been since 2006. And the share of properties withdrawn from the market by discouraged sellers receded from nearly one-third a year ago to 27.6% in October, a drop of 5.5 percentage points.

WASHINGTON, DC—US commercial property values rose broadly in October, notwithstanding a flattening in the top tier of the market, CoStar Group said Wednesday afternoon. Data from this month's CoStar Commercial Repeat Sale Indices also indicate that although January-to-October transaction volume was off 2.5% from the year-ago period, it still ranked as the second highest in the CCRSI's history.

CoStar says its value-weighted US Composite Index, reflecting larger asset sales common in core markets, was flat in the month of October, while up 8.2% on a year-over-year basis. The equal-weighted US Composite Index, which gives greater emphasis to the more numerous but lower-priced property sales occurring in secondary and tertiary markets, advanced by 1.4% in October, while posting a similar annual gain of 7.8%.

Similarly, pricing trends in the two sub-indices of the equal-weighted Composite Index mirrored the larger trends. The General Commercial segment, which is influenced by smaller, lower-priced properties, increased 1.4% month over month in October 2016 and 8.8% Y-O-Y. The higher-value Investment-Grade sub-indice rose 1.4% in October, in line with the 1.6% average monthly increase seen over the past 12 months. “The recent momentum in the General Commercial segment demonstrates the breadth of the pricing recovery,” according to CoStar.

If transaction volume is down on a Y-O-Y basis, then other metrics reported by CoStar are moving in a positive direction as far as sellers are concerned. The average time that for-sale properties spend on the market dropped from 345 days a year ago to 288 in October, a 17.8% annual decline.

The sale-price-to-asking-price ratio narrowed by 2.9 percentage points from 93.5% a year ago to 96.4%, the tightest this ratio has been since 2006. And the share of properties withdrawn from the market by discouraged sellers receded from nearly one-third a year ago to 27.6% in October, a drop of 5.5 percentage points.