updated 2/16/2011 12:17:02 PM ET 2011-02-16T17:17:02


  • Washington, DC continued its frontrunner status among major U.S. markets in leading the commercial real estate pricing recovery, ending 2010 with a 5% increase in the fourth quarter of 2010. Commercial property pricing in the Washington, DC market gained 15% for the full year of 2010 and have gained 19% since its market low. 
  • After three consecutive quarters of pricing increases, commercial property pricing in New York registered a 2% decline in the fourth quarter of 2010. New York commercial property pricing has increased 6% above its market low.
  • Chicago, San Francisco and Atlanta all experienced declines in pricing as the commercial property values in those markets continue to search for a pricing bottom. Los Angeles had its first pricing increase in the fourth quarter, albeit 1%, the first increase in that market since the first quarter of 2008.
  • At the national level, CoStar's Investment Grade Repeat-Sale Index was up nearly 7% for the month of December continuing the see-saw pattern observed with oscillating monthly pricing data, resulting in a slight positive quarter. While still below the pricing index from two years ago by 20%, the investment grade property index finished 2010 with a strong positive 8% climb for the year. From its peak in July 2007, the Investment Grade pricing index is down 34.1%, with the trough occurring in January 2010 when the Index was down 40%.
  • CoStar's General Grade Repeat Sales Index continues to search for a bottom as it slipped just under 1% for the month of December. The pricing index for General Grade commercial real estate lost 8.2% for the quarter and 11% for the year, and declined nearly 23% in the past two years.
  • The strong performance of the Investment Grade index was enough to lift the U.S. national Composite Index, which is an equal-weighted repeat sales analysis of all commercial real estate sales, with two thirds of the transaction count contained within the General Index. The Composite Index was up 1.8% for the month, down 5.8% for the quarter and down 6.3% for the year. Overall the Composite Index is down 22% over the past two years.
  • For the full quarter ending in December 2010, we saw declines across all property type indices when using the composite that includes all property sizes with industrial and retail down nearly 10%, office off 7% and multifamily off nearly 2%. Multifamily was the only composite index that was up for the year with a 3% gain. When analyzed separately by general and investment grade we see higher priced quality properties moving strongly in a positive direction.
  • By property type, pricing for commercial property sales in the top ten largest markets is recovering much stronger than the general market with the exception of retail.
  • In the West region, all property types are down in recent quarters except for Retail, which is stabilizing. In the South, only Multifamily pricing is up significantly. In the Midwest all property types are down especially office. In the Northeast, average pricing for Multifamily is up strongly with Industrial and Office pricing stabilizing.

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 sales methodology, widely considered as the most accurate way to measure price changes for real estate. The repeat sales 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.


The CCRSI January 2011 report is based on data through the end of December, 2010. In December of 2010, 983 pair sales were recorded compared to 656 in the prior month, 610 in October and 690 in September. It is typical to see volume increase at year end. In December of 2009 the pair sales count was 807, so volume on this basis is up 22% from a year earlier. Distress sales as a percent of the total has been increasing in each of the four quarters in 2010 with just over 20% in the 4th quarter with 18.5% for all of 2010. By property type the highest percent of distress in the fourth quarter were for Hospitality at 36%, followed by Multifamily at 24%, office at 21% and industrial and retail both near 19%. We cannot say that distress has peaked out yet and this definitely affects the indices provided here. 

Overall, there has been a significant upward trend in pair volume going back to 2009. January 2009 appears to have been the low point in the downturn in terms of pair volume, when 376 transactions were recorded. Since then, pair dollar volume has increased overall and the average deal sizes for both general and investment grade have increased. 

We provide one graph below showing the sales counts and a second showing dollar volume. Note that by transaction count the general sales accounted for 70% of the total sales transaction count in November and 66% in December. By volume in December the investment grade properties represented 85% of total volume. The average deal size within investment grade was nearly $16 million US Dollars in December compared to $11.1 million dollars in November and $11.8 million in October. The average dollar size for the general index was $1.6 million in December.

Charts accompanying this release are available at http://media.globenewswire.com/cache/9473/file/9581.pdf


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

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

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 forward-looking 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, 2009, and CoStar's Form 10-Q for the quarter ended September 30, 2010, under the heading "Risk Factors." In addition to these statements, there can be no assurance that distressed sales as a percentage of total sales has peaked; that the trends represented or implied by the indices will continue; and that the CCRSI will be released on the date and updated on the frequency set forth in the release. All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements.

CONTACT: Media Economist
         Chris Macke
         Senior Real Estate Strategist
         Dr. Norm Miller
         Vice President of Analytics

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved


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