The June 2012 CoStar Commercial Repeat Sale Indices are a look at a limited number of repeat commercial repeat sales. The numbers look at a set of repeat sales in April 2012 in two main ways: value-weighted, meaning relevant to premium properties and markets in order to see broader trends in capital flow in commercial markets, and equal-weighted, which focuses on more average-priced commercial properties.
It’s the equal-weighting that suggests that the broader economic recovery is lifting prospects for not just the big city office towers, but now also for the smaller malls and office complexes making up the secondary and tertiary markets. Having lagged behind the recovery in primary markets, the suggestion is that smaller communities are feeling some long-delayed relief in their commercial property markets.
APRIL PRICES MIXED: The two broadest measures of aggregate pricing for commercial properties within the CCRSI–the equal-weighted U.S. Composite Index and the value-weighted U.S. Composite Index–posted a 1% gain and a 2.2% retreat, respectively, in April, although both advanced over year-ago levels. The equal-weighted index weighs each repeat-sale equally and is therefore heavily influenced by the more numerous smaller transactions, and the value-weighted index weighs each repeat-sale by transaction size or value and is therefore heavily influenced by larger transactions.
Other items in the CCRSI:
Value-weighted gains slightly down: Indicators for the primary market fell somewhat, suggesting a bit of a leveling off of prices in the primary commercial real estate markets.
Distress levels on the decline: Only 24.3% of observed property trades in the study were distressed, which is down over 12% from the peak level of March 2011.
European Investors On The Rise: The study found the share of US commercial property purchases by European investors has more than tripled from 2011 levels.
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