Thursday, May 14, 2015

CoStar: Commercial Real Estate prices increased in March

by Bill McBride on 5/14/2015 01:11:00 PM

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

From CoStar: Property Prices Surge Upward In the First Quarter Of 2015

OMPOSITE PRICE INDICES CONTINUED TO RISE IN THE FIRST QUARTER OF 2015. ... The value-weighted U.S. Composite Index, which is influenced by high-quality assets in core markets, advanced by 4.7% in the first quarter of 2015 and is now 11% above the previous peak in 2007. The equal-weighted U.S. Composite Index, which weighs each transaction equally and therefore reflects the impact from more numerous smaller deals, rose 4.8% in the first quarter of 2015, although it remains 10% below its previous peak level.

ALL MAJOR PROPERTY TYPE AND REGIONAL INDICES ADVANCED AT DOUBLE- DIGIT ANNUAL RATES THROUGH MARCH 2015. As the CRE recovery extended to more markets and property types, all major property types and regional sectors posted double-digit annual gains through March 2015. The Multifamily Index has already fully recovered, eclipsing its previous peak, while the Retail and Industrial Indices advanced to within 10% of their previous peak levels and the Office Index remained 15% below its previous high-water mark in 2007. Among CCRSI’s regional indices, strong investor demand in core coastal metros propelled the Northeast Composite Index 6.1% above its prior peak, while the West Composite Index moved to within 8.4% of its prior peak in March 2015.
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 10.0% 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 a little elevated.

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