Have Commercial Real Estate Prices Bottomed Out?

CoStar Commercial Repeat-Sale Indices

• Investment grade real estate continued its positive pricing trend from August with a strong 5.48% increase in September based on the just-released CoStar Commercial Repeat-Sale Indices (CCRSI).
• For the first time since the second quarter of 2007, the four primary property types within the commercial real estate repeat sales index showed an increase in pricing in the third quarter.
• The CoStar investment grade real estate index remains down 4.89% from the same period last year, and down 29.08% from two years ago. However, for the third quarter, the investment grade real estate index increased 5.46%. This is a significant reversal from the previous quarter, as the investment grade real estate index was down 3.24%. The CoStar investment grade index is therefore showing positive price movement quarter over quarter.
• Conversely, the Moody’s/REAL Commercial Property Price Index (CPPI) reported a decline of 3.3% for August 2010, while CoStar’s investment grade index reported increases in August and again in September. The Moody’s CPPI August release triggered a number of “doom and gloom” stories in the media, just as CoStar’s commercial repeat sales index reported CRE sales figures heading in a positive direction.
• Investors, lenders and the media will undoubtedly want to understand why the two indices, which track similar property types, are providing such different views of investment grade real estate pricing.
• Click here for full report from CoStar Group