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Latest CoStar Commercial Repeat-Sale Analysis: Real Estate Prices Advance in July Amid Rising Transaction Volume and Improving Liquidity Measures

WASHINGTON, Sept. 17, 2014 (GLOBE NEWSWIRE) -- This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at July 2014 commercial real estate pricing. Based on 1,321 repeat sales in July 2014 and more than 125,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.





CCRSI National Results Highlights

  • CCRSI'S NATIONAL COMPOSITE INDICES POST BROAD GAINS 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.
  • GENERAL COMMERCIAL SEGMENT POSTS STRONGEST MONTHLY AND ANNUAL GAIN AMONG FOUR MAJOR INDICES. Within the equal-weighted U.S. Composite Index, the General Commercial segment increased by 2.0% in July 2014 and 12.0% for the 12 months ending in July 2014, while its Investment Grade counterpart remained essentially unchanged in July 2014 and up 11.3% for the trailing 12 months ending in July 2014. Pricing for property in the General Commercial segment has been increasing steadily over the past 15 months, and gained momentum in recent months due to improving market fundamentals and increased capital flows across the commercial real estate size and quality spectrum. The General Commercial Index is up more than 27% from its trough in 2011, and is 18.5% below its prerecession peak. The Investment Grade segment has increased 40.3% from its trough in the beginning of 2010 and is 15.4% below its prior peak.
  • TRANSACTION VOLUME CONTINUES TO RISE. Trailing 12-month repeat sale deal volume1 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. Consistent with recent pricing gains, sales volume increased evenly across the high and low end of the market as investors broaden their search for yield. Trailing 12-month sales volume rose 26% in the Investment Grade Index and 21% in the General Commercial Index through July 2014.
  • LIQUIDITY METRICS SHOW INCREMENTAL IMPROVEMENT. The sale price-to-asking price ratio narrowed by two and a half percentage points in the 12-month period ended in July 2014 to 90.5% — the highest this ratio has been since 2008. Meanwhile, the average time on market for for-sale properties fell 3.5% in the 12 months ending in July 2014, and the share of properties withdrawn from the market by discouraged sellers receded by one and a half percentage points during the same period to 39.9%.
  • DISTRESS SALES WANE. 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. The dissipation of distress property deals in the market continues to support higher and more consistent pricing gains.

1 Transaction volume does not include the $4.4 billion sale of Stuyvesant Town-Peter Cooper Village apartments in New York City in June, 2014 via deed in lieu of foreclosure.

Monthly CCRSI Results, Data through July of 2014
1 Month 1 Quarter 1 Year Trough to
Earlier Earlier Earlier Current
Value-Weighted U.S. Composite Index 0.8% 1.5% 8.0% 59.9%1
Equal-Weighted U.S. Composite Index 1.5% 5.1% 11.9% 28.8%2
U.S. Investment Grade Index -0.9% 1.7% 11.3% 40.3%3
U.S. General Commercial Index 2.0% 5.2% 12.0% 27.2%4
1 Trough Date: January 2010 2 Trough Date: March 2011 3 Trough Date: March 2010 4 Trough Date: March 2011
Monthly Liquidity Indicators, Data through July of 2014
1 Month 1 Quarter 1 Year
Current Earlier Earlier Earlier
Days on Market 408 413 415 423
Sale Price-to-Asking Price Ratio 90.5% 89.6% 88.7% 88.0%
Withdrawal Rate 39.9% 39.3% 41.1% 41.8%
1 Average days on market and sale-price-to-asking-price ratio are both calculated based on listings that are closed and confirmed by CoStar's research team. The withdrawal rate is the ratio of listings withdrawn from the market by the seller to all listings for a given month

Several charts accompanying this release are available at http://media.globenewswire.com/cache/9473/file/28873.pdf

About the CoStar Commercial Repeat-Sale Indices

The CoStar Commercial Repeat-Sale Indices (CCRSI) is the most comprehensive and accurate measure of commercial real estate prices in the United States. In addition to the national Composite Index (presented in both equal-weighted and value-weighted versions), national Investment Grade Index and national General Commercial Index, which we report monthly, we report quarterly on 30 sub-indices in the CoStar index family. The sub-indices include breakdowns by property sector (office, industrial, retail, multifamily, hospitality 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 prime market areas in the country).

The CoStar indices are constructed using a repeat sales methodology, widely considered the most accurate measure of price changes for real estate. This methodology measures the movement in the prices of commercial properties by collecting data on actual transaction prices. When a property is sold more than one time, a sales pair is created. The prices from the first and second sales are then used to calculate price movement for the property. The aggregated price changes from all of the sales pairs are used to create a price index.

More charts accompanying this release are available at http://media.globenewswire.com/cache/9473/file/28874.pdf

CONTACT:

Mark A. Klionsky, Senior Vice President-Marketing (mklionsky@costargroup.com).

For more information about the CCRSI Indices, including the full accompanying data set and research methodology, please visit http://costargroup.com/costar-news/ccrsi.

ABOUT COSTAR GROUP, INC.

CoStar Group (Nasdaq:CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. 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. Through LoopNet, the Company operates the most heavily trafficked commercial real estate marketplace online with more than 8.7 million registered members. Apartments.com is a premier online apartment resource for renters that matches apartment seekers with great apartment homes and provides property managers and owners a proven platform for marketing their properties. CoStar operates websites with over 16 million unique monthly visitors in aggregate during second quarter of 2014. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S., Canada and Europe with a staff of over 2,300 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.

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 based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends represented or implied by the indices will not continue or produce the results suggested by such trends; and the risk that investor demand and commercial real estate pricing levels will not continue at the levels or with the trends indicated in this release. 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 in CoStar's Annual Report on Form 10-K for the year ended December 31, 2013, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, as well as the company's other filings with the SEC available at the SEC's website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements, whether as a result of new information, future events or otherwise.

CONTACT: Mark Klionsky Senior Vice President-Marketing (800) 681-1513 mklionsky@costar.com

Source:CoStar Group, Inc.