CoStar: Commercial Real Estate prices increased more than 11% year-over-year in May - InvestingChannel

CoStar: Commercial Real Estate prices increased more than 11% year-over-year in May

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

From CoStar: Value-Weighted U.S. Composite Price Index Approaches Prerecession Peak Levels

COMMERCIAL REAL ESTATE PRICES POST DOUBLE-DIGIT ANNUAL GAINS IN MAY: The two broadest measures of aggregate pricing for commercial properties within the CCRSI—the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index—increased by 0.9% and 1.2%, respectively, in the month of May 2014, and 11.4% and 11.7% respectively, year over year, reflecting a broad improvement in market fundamentals seen across all property types. The value-weighted U.S. Composite Index, which is heavily influenced by core property transactions, has now risen within 1% of its prerecession peak level reached in 2007, while its equal-weighted counterpart, which is more influenced by smaller non-core property sales, has recovered to within 20% of its 2007 high water mark.

DISTRESS LEVELS CONTINUE TO DISSIPATE: The percentage of commercial transactions involving distressed assets has declined to 10.5% in May 2014 from over 17% one year earlier. In the multifamily and industrial sectors, the distress share of total sales fell into the single digits, while it remains comparatively high at 11% in the retail sector and 17% in the office sector, suggesting there is more room for pricing appreciation. The share of distress trades in late-recovery markets such as Chicago, Atlanta, and Detroit remain near 20%, while in the early-recovery, coastal markets of Los Angeles, San Francisco and San Jose, distress levels are nearly non-existent.
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 almost back to the pre-recession peak, however the equal weighted index is about 20% below the pre-recession peak.

Commercial Real Estate Prices The second graph shows the percent of distressed “pairs”.

The distressed share is down from over 30% at the peak, to 10.5% in May.

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

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