CoStar has released its latest Commercial Repeat Sale Indices (CCRSI), offering a review of commercial real estate pricing for April, which reflected strong property price gains as the price gap narrowed between buyers and sellers. The CCRSI measures the movement in the prices of commercial properties by collecting data on actual transaction prices. Some hilights from the report include:
The general commercial segment remains on an upward trajectory, despite recent price volatility. The equal-weighted U.S. Composite Index's General Commercial segment declined by 1% in April 2014. Despite the volatility in the monthly data, the overriding trend over the past 12 months for this segment has been outsized pricing gains as capital expanded into secondary markets. The 13.2% year-over-year increase in April 2014 was the largest such gain among the four major indices.
Increased investment activity reflects a healthy market for transactions. Repeat sales transaction volume year-to-date through April 2014 increased 25% from the same period in 2013, and is approaching 2006 transactions levels.
The price gap between buyers and sellers continues to narrow. The delta between sale prices and asking prices closed by more than one percentage point in the 12-month period ended in April 2014. This gauge of liquidity varies by region and property type, however. In the West region, sellers are achieving over 90% of asking prices, while in the Midwest this ratio is 82%, the lowest of the four regions. Multifamily properties are driving much of this improvement in liquidity. In the core coastal markets of Los Angeles, San Francisco, Boston and New York, for example, multifamily sale prices relative to asking prices are back to, or above, 2006-07 peak levels.
Other liquidity measures have also improved. The average time on market for for-sale properties fell 3% in the 12 months ending in April 2014, and the share of properties withdrawn from the market by discouraged sellers declined by more than two percentage points during the same period.
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