Thursday, January 15, 2015

CoStar: Commercial Real Estate prices increased in November

by Bill McBride on 1/15/2015 01:22:00 PM

Here is a price index for commercial real estate that I follow. 

From CoStar: CRE Price Recovery Continues With Strong Showing in November

The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index—increased by 1% and 0.7%, respectively, in the month of November 2014, contributing to annual gains of 9.9% and 14.8%, respectively, for the 12 months ending in November 2014.
VALUE-WEIGHTED U.S. COMPOSITE INDEX SET A NEW HIGH-WATER MARK. Investors’ healthy appetite for core properties propelled growth in the value-weighted U.S. Composite Index, which surpassed its pre-recession peak previously set in 2007 by 5.1% in November 2014.

PRICE GROWTH ACCELERATED IN EQUAL-WEIGHTED INDEX. Price growth in the equal-weighted U.S. Composite Index, influenced more by smaller, non-core deals, accelerated to an annual pace of 14.8% in November 2014, from an average annual pace of 7.5% in 2013.
emphasis added
Commercial Real Estate Prices Click on graph for larger image.

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 at a record high, but the equal weighted is still 14% below the pre-recession peak.

There are indexes by sector and region too.

Commercial Real Estate Distress SalesThe second graph shows the percent of distressed "pairs".

The distressed share is down from over 35% at the peak, but still somewhat elevated.

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