CoStar Commercial Repeat Sale Index October 2011

8/3/2019 CoStar Commercial Repeat Sale Index October 2011

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COSTAR COMMERCIAL REPEAT-SALE INDICES OCTOBER 2011 Release (With Data through August 2011)

OCTOBER 2011 CCRSI RELEASE (With Data through August 2011)www.costar.com/ccrsi

AUGUST COMMERCIAL REAL ESTATE PRICES LEVEL-OFF FOLLOWING

FOUR CONSECUTIVE MONTHS OF GAINS

DECLINE IN INVESTMENT-GRADE INDEX FROM GLOBAL ECONOMIC

UNCERTAINTY LARGELY OFFSET BY STEADY PERFORMANCE IN GENERAL

COMMERCIAL PROPERTY SALES

After four consecutive months of positive price movement, CoStars monthly National Composite Index of commercial

real estate prices posted a slight decline of 0.5% in August 2011, driven mainly by softening pricing of high-end

commercial properties, the segment most sensitive to the recent global financial market upheaval. This months CoStar

Commercial Repeat Sale Index (CCRSI) provides the markets first look at August 2011 commercial real estatepricing and offers the broadest measure of commercial real estate repeat sales activity. This months analysis is based

on 839 repeat sale transactions in August 2011 and more than 100,000 repeat sale transactions since 1998.

August 2011 Highlights

The General Commercial Index continued its upward trend over the last four months, and prices gained 0.1%. Themonthly Investment Grade Index, on the other hand, declined 2.7% during the month of August, giving back its 1%

gain in July 2011.

The August price drop for the Investment Grade Index was accompanied by a slight decline in both distress andnon-distress transactions, reflecting recent capital markets volatility and reduced CMBS lending.

The steadiness in the General Commercial Grade Index was supported by increased sales of non-distressedproperties. Overall distress sales as a percentage of total sales have declined gradually in the last six months,

although the percentage of distress sales has fallen more rapidly in the General Commercial index than in the

Investment Grade index.

Commercial real estate market fundamentals remained stable through August. CoStar Groups analysis of thirdquarter 2011 data found that occupancy continued to improve across all commercial property types, although as

yet without broad-based rent growth. This stability helped to mitigate the impact of economic uncertainty as

observed in the movement of the General Commercial Index.


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COSTAR COMMERCIAL REPEAT-SALE INDICES AUGUST 2011 Release (With Data through August 2011)

A critical factor in future commercial real estate price movement to watch for in coming months is the degree towhich current economic woes impact the availability of real estate financing, and whether they result in

deteriorating market fundamentals.

CCRSI Index Results CoStars Composite Commercial Repeat Sales Index decreased by 0.5% in August 2011. It is now 3.6%

below the same period last year and 34.3% below its peak in August 2007.

CoStars General Grade Commercial Repeat Sales Index increased by 0.1% in August 2011 and is now

4.6% below its year-ago level and off 34.2% from its August 2007 peak.

CoStars Investment Grade Commercial Repeat Sales Index decreased 2.7% in August 2011 and is now

1.4% above the same period last year and 35.6% below its peak in August 2007.

National Monthly Indices

Comparison Table for Current Release (ending 8/31/2011)


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1 MONTHEARLIER

1 YEAREARLIER

Peak-to-

Current

National Composite Index -0.5% -3.6% -34.3%

National Investment GradeIndex

-2.7% 1.4% -35.6%

National General Commercial

Index0.1% -4.6% -34.2%

About the CoStar Commercial Repeat-Sale Indices

The CoStar Commercial Repeat-Sale Indices (CCRSI) are the most comprehensive and accurate measures ofcommercial real estate prices in the United States. In addition to the national Composite Index, national InvestmentGrade Index and national General Commercial Index, which we report monthly, we report quarterly on 28 sub-indices in the CoStar index family. The sub-indices include breakdowns by property sector (office, industrial, retail,multifamily, 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 10 largest metropolitan areasin the country).

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

COMMENTARY ON DATA

The CCRSI October 2011 report is based on data through the end of August 2011. With a total of 839 salespairs for the month, the transaction activities stayed at a level comparable to that in the years before the 200809market crash. At the low point in the last downturn, only a total of 385 transactions were recorded in January 2009.Of the total 839 sales pairs, 705 were General Commercial deals and 134 were Investment Grade.

Total transaction dollar volume went down by 8% from its six-month average. The decline was concentrated inthe Investment Grade transactions, where the volume fell by 10% from its six-month average. The GeneralCommercial transaction volume stayed at par with its six-month average, and the average transaction sizeremained stable, at around $1.7 million.

Distress sales as a percentage of total sales continued to decline gradually from their peak of 35.4% in March2011 and accounted for 26% (216 sale pairs) of all repeat sale transactions in August 2011. Even though distresssales gradually declined over the past six months, the overall level was still historically high, suggesting that distresscontinues to be a dominant factor of CRE pricing.

We provide three graphs below showing the sales counts, dollar volume, and distress sales as a percentage oftotal sales. Note that by transaction count, General Grade sales pairs accounted for 84% of the total salestransactions, a ratio that has been stable in the last 12 months.


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Number of Repeat-Sale Transactions by Count

0

200

400

600

800

1,000

1,200

1,400

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

NumberofSalePairs

Investment Grade Pair Count General Commercial Pair Count


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Number of Repeat-Sale Transactions by Dollar Volume

0

1

2

3

4

5

6

7

8

9

10

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

BillionsofDollars

Investment Grade Pair Volume General Commercial Pair Volume

Distressed Sales as a Percentage of Total Sales


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NationalCompositeCRE Price

Index

NationalIndices by

Product Type*

RegionalIndices*

Regional Indicesby Property Type

Top Ten MetroMarket Indices by

Property Type

GeneralCommercial

Office Northeast

Northeast:Office,

Multifamily,Industrial, Retail

Office

All Retail Midwest

Midwest:Office,


Multifamily

InvestmentGrade

Industrial South

South:Office,


Industrial

Multifamily West

West:Office,


Retail


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Largest Office Metro Areas Largest Industrial Metro Areas

# CBSA # CBSA

1 New York 1 Los Angeles

2 Los Angeles 2 New York

3 Washington 3 Chicago4 Chicago 4 Dallas -Fort Worth

5 Dallas-Fort Worth 5 Atlanta

6 Boston 6 Detroit

7 San Francisco 7 Riverside

8 Atlanta 8 Houston

9 Philadelphia 9 Philadelphia

10 Houston 10 Miami-Fort Lauderdale

Largest Retail Metro Areas Largest Multifamily Metro Areas

# CBSA # CBSA

1 New York 1 New York

2 Los Angeles 2 Los Angeles

3 Chicago 3 Chicago

4 Dallas -Fort Worth 4 Dallas -Fort Worth

5 Miami-Fort Lauderdale 5 Washington

6 Atlanta 6 Houston

7 Houston 7 Boston8 Philadelphia 8 Atlanta

9 Washington 9 Seattle

10 San Francisco 10 Philadelphia


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National Property Type Quarterly Indices through June of 2011

50

75

100

125

150

175

200

225

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

IndexValue(20004q=100

U.S. Office U.S. Industrial U.S. Retail U.S. Multifamily


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U.S. Regional Quarterly Indices Through June of 2011

25

50

75

100

125

150

175

200

225

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


South Composite Northeast Composite Midwest Composite West Composite


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Office Top 10 Metros Quarterly Indices

75

100

125

150

175

200

225

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In

dexValue(20004q=100

U.S. Office Top 10 Office Metros


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Industrial Top 10 Metros Quarterly Indices

75

100

125

150

175

200

225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In

dexValue(20004q=100

Top 10 Industrial Metros U.S. Industrial


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Retail Top 10 Metros Quarterly Indices

75

100

125

150

175

200

225

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In

dexValue(20004q=100

Top 10 Retail Metros U.S. Retail


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Multifamily Top 10 Metros Quarterly Indices

75

100

125

150

175

200

225

250

275

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In

dexValue(20004q=100

Top 10 Multifamily Metros U.S. Multifamily


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U.S. West Property Type Quarterly Indices

75

100

125

150

175

200

225

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


West Office West Industrial West Retail West Multifamily


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U.S. South Property Type Quarterly Indices

75

100

125

150

175

200

225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


South Office South Industrial South Retail South Multi family


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U.S. Midwest Property Type Quarterly Indices

50

75

100

125

150

175

200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In

dexValue(20004q=100

Midwest Office Midwest Industrial Midwest Retail Midwest Multifamily


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U.S. Northeast Property Type Quarterly Indices

75

100

125

150

175

200

225

250

275

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


Northeast Office Northeast Industrial Northeast Retail Northeast Multifamily


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COSTAR COMMERCIAL REPEAT SALE INDICES AUGUST 2011 Release (With Data through August 2011)

CONTACT:

RICHARD SIMONELLI(888) [email protected]

For more information about CCRSI Indices, including our legal notices and disclaimer, please visithttp://www.costar.com/ccrsi .

ABOUT COSTAR GROUP, INC.

CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of information and analytic services. 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. Headquartered in Washington, DC, CoStar

maintains offices throughout the U.S. and in Europe with a staff of approximately 1,500 worldwide, including the industry's largest

professional research organization. For more information, visithttp://www.costar.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 subject to many risks and uncertainties that could cause actual results to differ materially from

these s tatements. More information about potential factors that could cause actual results to differ materially from those discussed in the forward- lookin

statements include, but are not limited to, those stated in CoStar's filings from time to time with the Securities and Exchange Commission, including

CoStar's Form 10-K for the year ended December 31, 2010, and CoStar's Form 10-Q for the quarter ended June 30, 2011, under the heading "Risk

Factors." In addition to these statements, there can be no assurance as to how or whether current economic woes will impact the availability of real

estate financing and whether they will result in deteriorating market fundamentals; that distress sales will continue to be a dominant factor of CRE

pricing; that commercial real estate pricing levels will continue at the levels or with the trends indicated in this release; that the trends represented or

implied by the indices will continue; and that the CCRSI will be released on the date and updated on the frequency set forth in the release. 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.

CoStar Commercial Repeat Sale Index October 2011

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