PRESS RELEASE

CCRSI RELEASE – April 2022
(With data through March 2021)

 
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Complete CCRSI data set accompanying this release

This month's CoStar Commercial Repeat Sale Indices (CCRSI) provides the market's first look at commercial real estate pricing trends through March 2022. Based on 1,940 sale pairs in March 2022 and more than 268,000 repeat sales since 1996, the CCRSI offers the broadest measure of commercial real estate repeat sales activity.

CCRSI National Results Highlights

• U.S. COMPOSITE PRICE INDICES PARE BACK QUARTERLY PRICE GAINS IN THE FIRST QUARTER OF 2022 AFTER REACHING RECORD HIGHS IN Q4 of 2021. The value-weighted U.S. Composite Index, which is more heavily influenced by high-value trades common in core markets, moved 1.3% lower to 294 during the first quarter of 2022, off from its revised fourth quarter value of 298. This compares to the quarterly gain of 5.4% in Q4 of 2021. The index was up by 16.5% in the 12-month period that ended in March 2022 and is now 26.2% higher than in February 2020, before the onset of the COVID-19 pandemic.

• The equal-weighted U.S. composite index, which reflects the more numerous but lower-priced property sales typical of secondary and tertiary markets, fell 0.5% to 295 in first quarter of 2022, compared to its gain of 5.4% in the fourth quarter of 2021. The index rose by 14.6% in the 12-month period that ended in March 2022 and is now 22.9% above its pre-pandemic level in February 2020.

• The value-weighted composite price index fell by 1.4% in March 2022, its second consecutive month of declines, while the equal weighted composite price index was unchanged from its February 2022 level at 295. Both indices peaked in January 2022 at 300.
  
   

• THE FALL IN THE EQUAL-WEIGHTED COMPOSITE INDEX WAS DRIVEN BY A PULLBACK IN ITS INVESTMENT GRADE SUB-INDEX. The investment grade sub-index, more heavily influenced by higher-value assets, fell by 4.1% in the first quarter of 2022, reversing course from its 5.5% quarterly gain in Q4 of 2021. The general commercial sub-index, more heavily influenced by smaller, lower-priced assets, rose by 1.2% in the first quarter of 2022, a slowdown from its 5.2% gain in Q4 of 2021.

• The investment grade sub-index fell by 1.4% in March 2022 over its February 2022 level, its second consecutive monthly decline, while the general commercial sub-index rose in March 2022 by 1.1% over its February 2022 level, retracing half of its monthly pullback from January 2022.

• Both sub-indices are off from their historical highs reached in January 2022. The general commercial segment has been in favor of late as it saw price growth of 15.9% over the 12-month period that ended in March 2022, compared to the investment grade segment, which registered a gain of 11.4% over the same period.

• TRANSACTION VOLUME TUMBLED IN THE FIRST QUARTER OF 2022. Transaction volume fell by 44.8% to $43.8 billion in the first quarter of 2022 after an extraordinary surge of activity was recorded in the fourth quarter of 2021. Investment grade volume fell by 49.1% to $27.7 billion in the first quarter of 2022, almost half of the activity recorded in the final quarter of 2021, while commercial grade volume fell by 35.6% over the same quarter to $16.1 billion.

• Composite pair volume of $224.4 billion in the 12-month period ending in March 2022 was 113.7% higher than over the 12-month period that ended in March 2021. The increase in volume was broad-based with similar increases in both the general commercial segment, which gained 104.9% over the same period, and the investment grade segment, which rose by 118.5%, also over the same 12-month period.

• Transaction activity picked up in March 2022 over the prior month, registering a 22.5% gain over February 2022, with investment grade segment transaction volume advancing by 26.1% over the month and the general commercial segment seeing a 16.4% gain over February 2022.

• THE SHARE OF REPEAT-SALE TRADES THAT WERE DISTRESSED MOVED HIGHER BUT REMAIN LOW. About 1.9% of all repeat-sale trades were distressed in March 2022. General commercial distressed sales in March 2022 measured 1.13% of all repeat-sale trades, below its average since the onset of the pandemic. Investment grade distressed sales accounted for 0.72% overall in March 2022, more than double its February 2022 share of 0.3% and its highest share since October 2020.

Quarterly CCRSI Property Type Results

• THE HOSPITALITY INDEX WAS THE TOP PERFORMER AMONG ALL SIX EQUAL-WEIGHTED PROPERTY-TYPE INDICES FOR THE THIRD CONSECUTIVE QUARTER. Recovering from the effects of the pandemic, the U.S. Hospitality index registered a 10.5% increase in the first quarter of 2022 over the fourth quarter of 2021, the largest quarterly gain among all property types and contributing to an annual gain of 12.3% in the 12-month period that ended in March 2022. The index is 13.2% above its pre-pandemic level in February 2020.

• THE INDUSTRIAL INDEX COOLED FOR THE THIRD CONSECUTIVE QUARTER, CLOSING IN ON STALL SPEED. The U.S. Industrial Index edged just 0.3% higher in the first quarter of 2022, its slowest quarterly gain in since the fourth quarter of 2017. Strong fundamentals have drawn investors to this property sector but slowing price appreciation that began in the second half of 2021 continued into 2022. The index gained 14.0% in the 12-month period ending in March 2022 and is 29.0% above its pre-pandemic level. The Prime Industrial Metros Index fell by 2.5% in the first quarter of 2022 as investors sought yield in secondary markets but is 13.4% higher than a year ago and 35.9% higher than its pre-pandemic level in February 2020.

• PRICING FALTERS IN THE MULTIFAMILY INDEX. After twelve consecutive quarters of gains, the U.S. Multifamily Index fell 1.0% in the first quarter of 2022, its first pullback since the fourth quarter of 2018. The index rose by 13.3% in the 12-month period that ended in March 2022 and is 29.5% higher than its pre-pandemic level in February 2020, the strongest recovery among all six property types. Capital continues to move down the risk spectrum as prime markets experience eroding prices. The Prime Multifamily Metros Index fell by 2.0% in the first quarter of 2022, its second consecutive month of declines, but rose by 6.6% over the 12-month period that ended in March 2022, its slowest annual gain in four quarters.

• OFFICE PRICE GROWTH STALLED IN THE FIRST QUARTER. The U.S. Office Index was unchanged in the first quarter of 2022 after slowing in the fourth quarter of 2021. Over the 12-month period that ended in March 2022, office prices were up 10.0%, together with retail prices the smallest annual gain of all property types. The index is now 16.5% higher than its pre-pandemic level in February 2020. Price growth in the Prime Office Metros Index edged 0.2% higher in the first quarter but rebounded by 6.4% over the 12-month period that ended in March 2022 as investors sought opportunities in core markets.

• RETAIL SECTOR CHALLENGES CONTINUE TO WEIGH ON U.S. RETAIL PRICE GROWTH. The U.S. Retail index rose 0.3% in the first quarter of 2022, slowing for the third consecutive quarter. The index gained 10.0% in the 12-month period that ended in March 2022, together with office prices the slowest quarterly gain among all property type indices. Good quality, well-located retail continued to draw investor interest and pricing growth, while pricing slowed in centers with elevated vacancy rates. The index was 19.4% higher in March 2022 than its pre-pandemic level in February 2020. The Prime Retail Metros Index rose by 4.1% in the 12-month period that ended in March 2022 but fell by 2.7% over the fourth quarter of 2021, suggesting some pullback in activity in core markets in the new year.

• THE U.S. LAND PRICE INDEX SURGED IN THE FIRST QUARTER OF 2022, RISING BY 6.8%, THE FASTEST GAIN IN FIVE QUARTERS. The U.S. Land Index is the most volatile of the property type indices but gained 15.3% in the 12-month period that ended in March 2022 and is now 26.2% higher than its pre-pandemic level in February 2020.

Quarterly CCRSI Regional Results

• EQUAL-WEIGHTED PRICING TRENDS DIVERGED ACROSS REGIONS IN THE FIRST QUARTER OF 2022 WHILE ANNUAL GAINS SLOWED. The South Composite Index advanced by 1.3% in the first quarter of 2022, the fastest quarterly growth of all regions, but slower than its 1.4% gain in the fourth quarter of 2021. The Midwest Composite Index stalled at 0.2% in the first quarter of 2022, while both Northeast and West Composite indices fell by 1.8% over the same period. All regions saw slowing price gains in the 12-month period that ended in March 2022.

• MULTIFAMILY AND RETAIL PRICES SHOW THE STRONGEST ANNUAL GROWTH AMONG SECTORS IN THE SOUTH REGION. The South Composite Index grew by 12.8% in the 12-month period that ended in March 2022, the fastest annual gain among all regions. The advance was led by the double-digit annual gain of 17.7% in the South Multifamily Index, but the South Retail Index also contributed, with a 12.2% gain over the same period. The high concentration of faster growing sunbelt markets in the South region drove these results. The South Industrial Index weakened to 10.9% growth in the 12-month period that ended in March 2022, following more robust annual gains in the three prior quarters. Price growth in the office segment in the South slowed to 10.4% in the 12-month period that ended in March 2022, the weakest annual growth of all property segments in the South.

• STRONG GAINS IN THE INDISTRIAL SECTOR DROVE PRICE GROWTH IN THE NORTHEAST. The Northeast Composite Index advanced 11.6% in the 12-month period that ended in March 2022, slowing from its 15.2% annual gain in the prior quarter. This showing was buttressed in large part by strong growth in the industrial sector, with the Northeast Industrial Index rising by 15.2% over the 12-month period that ended in March 2022. The Northeast Multifamily Index grew by 8.3% over the same period, while the Northeast Office Index rose by 8.0%, slowing from its prior quarter gains. The Northeast Retail Index slowed to less than half its prior quarter growth rate, falling to 7.3% over the 12-month period that ended in March 2022.

• ANNUAL PRICE GROWTH IN THE WEST SLOWED IN ALL PROPERTY SEGMENTS. The West Composite Index rose by 11.4% over the 12-month period that ended in March 2022, its slowest annual gain in four quarters. Deceleration in price gains in all property segments except for the office segment weighed on overall price gains. The West Industrial Index rose by 17.6% over the 12-month period that ended in March 2022, slowing from its prior two quarters of larger annual price gains. The 15.5% gain in the West Multifamily index and 10.4% increase in the West Retail Index over the same period contributed to the slowing price growth. In contrast, price growth in the office segment in the West accelerated to 11.8% over the 12-month period that ended in March 2022, compared to its 8.8% annual gain in the prior quarter.

• SLOWING PRICE GAINS ACROSS PROPERTY SEGMENTS WEIGH ON PRICING GROWTH IN THE MIDWEST REGIONAL INDEX. The Midwest Composite Index rose by 7.6% over the 12-month period that ended in March 2022, decelerating for the third consecutive quarter and the slowest annual gain of all regions. All property segments except the office segment saw decelerating annual gains. The Midwest Multifamily Index advanced by 9.4% in the 12-month period that ended in March 2022, edging out the 9.1% annual gain in the Midwest Retail Index over the same period. The Midwest Industrial Index advanced 8.5% over the year, while the Midwest Office Index grew by 7.6%.

About The CoStar Commercial Repeat-Sale Indices

The CoStar Commercial Repeat-Sale Indices (CCRSI) are the most comprehensive and accurate measures of commercial real estate prices in the United States. In addition to the national Composite Index (presented in both equal-weighted and value-weighted versions), national Investment-Grade Index, and national General Commercial Index, which are reported monthly, 30 sub-indices in the CoStar index family are reported quarterly. The sub-indices include breakdowns by property sector (office, industrial, retail, multifamily, hospitality, and land), by region of the country (Northeast, South, Midwest, and West), by transaction size and quality (general commercial, investment-grade), and by market size (composite index of the prime market areas in the country).

The CoStar indices are constructed using a repeat sales methodology, widely considered the most accurate measure of price changes for real estate. This methodology measures the movement in the prices of commercial properties by collecting data on actual transaction prices. When a property is sold more than once, a sales pair is created. The prices from the first and second sales are then used to calculate price movement for the property. The aggregated price changes from all the sales pairs are used to create a price index. Historical price indices are revised as new data is recorded.

CONTACT:

Matthew Blocher, Vice President, Marketing & Communications, CoStar Group (mblocher@costar.com).

For more information about the CCRSI Indices, including the full accompanying data set and research methodology, legal notices, and disclaimer, please visit http://costargroup.com/costar-news/ccrsi.

ABOUT COSTAR GROUP, INC.

CoStar Group, Inc. (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information, and analytics. 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. STR provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry. Ten-X provides a leading platform for conducting commercial real estate online auctions and negotiated bids. LoopNet is the most heavily trafficked commercial real estate marketplace online. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Homesnap is an industry-leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and reinforce the agent-client relationship. Homes.com offers real estate professionals advertising and marketing services for residential properties. Realla is the UK’s most comprehensive commercial property digital marketplace. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. CoStar Group’s websites attract tens of millions of unique monthly visitors. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada, and Asia. From time to time we plan to utilize our corporate website, www.costargroup.com, as a channel of distribution for material company information. For more information, visit www.CoStarGroup.com