CoStar: Commercial Real Estate prices increased 11.9% year-over-year in July

CoStar’s equal-weighted U.S. Composite Index increased by a strong 1.5% in July 2014 and 11.9% for the 12 months ending in July 2014. It has now advanced to within 20% of its prerecession peak reached in 2007, supported by increased investor interest beyond core properties in primary markets. The value-weighted U.S. Composite Index, which is more heavily influenced by higher-value trades, began to recover earlier and is nearly back to its peak levels reached in 2007. As a result, annual pricing gains have moderated slightly over the last several months. The value-weighted Composite Index advanced 0.8% in July 2014, and 8.0% for the 12 months ending in July 2014.

Trailing 12-month repeat sale deal volume increased 24% as of July 2014 over the prior 12-month period ending in July 2013, as healthy market fundamentals, low interest rates and increasing allocations to commercial real estate by major investors provide a healthy environment for real estate transactions.

Distress sales as a percentage of total sales continued to decline from a peak of over 35% in 2011 to 11% through the first seven months of 2014.
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Commercial Real Estate Prices
This graph from CoStar shows the the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index indexes.

The value weighted index is almost back to the pre-recession peak, but the equal weighted is still well below the pre-recession peak.

Commercial Real Estate Prices The second graph shows the percent of distressed “pairs”.

The distressed share is down from over 35% at the peak.

Note: These are repeat sales indexes – like Case-Shiller for residential – but this is based on far fewer pairs.

 

 

 

 

 

 

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