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This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at June 2016 commercial real estate pricing. Based on 1,535 repeat sales in June 2016 and more than 163,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.
CCRSI National Results Highlights
CRE PRICE INDICES RESUMED HEALTHY GROWTH IN SECOND QUARTER. After experiencing modest growth in the first quarter of 2016 in the wake of global economic
uncertainty, both CCRSI’s national composite price indices ended the second
quarter of 2016 on a stronger note as investor confidence rebounded. The value-weighted U.S. Composite Index, which is influenced by the sale of high-quality, larger assets, advanced by 3.3%, while the equal-weighted U.S. Composite Index, which reflects the more numerous sales of smaller properties, rose 2.1% in the second quarter of 2016.
HOWEVER, THE PACE OF PRICE GROWTH HAS MODERATED ON AN ANNUAL BASIS. While price growth resumed in both composite indices during the second quarter of 2016, the rate of increase has dropped into the single digits as of June 2016 from a double-digit
annual pace in the 12-month periods ending in June 2014 and June 2015. This suggests the pace of price growth may continue to plateau in 2016 as the current cycle advances.
TRANSACTION VOLUME REMAINS LOWER THAN LAST YEAR’S RECORD-SETTING PACE. Total investment sales volume of $57.7 billion in the first half of 2016 was down 5.4% compared to the first half of 2015 as capital flows continued to decelerate from last year’s record-setting level. Favorable market conditions and deteriorating international economic conditions appear to provide the motivation for continuing elevated liquidity in the U.S. real estate markets.
MAJOR PROPERTY SECTORS POST UNIFORM GROWTH OF NEARLY 2% IN SECOND QUARTER. Showing steady, consistent growth across the CRE property spectrum, the U.S. office, industrial, and retail indices advanced a solid 1.9%, while the U.S. Multifamily Index increased by 1.8% in the second quarter of 2016.
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HOSPITALITY INDEX NEARLY FULLY RECOVERED. Although it had the largest peak-to-trough decline of any property type in the last recession, the Hospitality Index posted the strongest growth in the second quarter of 2016, advancing by 4.5% to reach within 1% of its prior peak level.
WEST REGION SURPASSES PRERECESSION PEAK. While all four U.S. regional indices saw healthy growth in the second quarter of 2016, the West Composite Index advanced past its previous cyclical high reached in 2007, becoming the second region to do so behind the Northeast Composite Index.
Latest CoStar Commercial Repeat-Sale Analysis: Property Price Growth Rebounds
in Q2
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