Commercial Real Estate Pricing Recovery Continues

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I’m not saying that we’re quite back to pre crash levels of pricing but we’re getting there.  Given the general malaise in the American economy with job growth, GDP growth and most other indicators, it’s surprising that the commercial real estate recovery has been as strong and broad based as it has.

It didn’t start out this way as it was the triple net and absolute net retail and multifamily housing segments that lead the way.  As the pricing on the investment grade, single tenant, long corporate lease, triple net retail segment got stupid and there’s really no place else to park your money, it started pulling up the secondary and tertiary markets.

Another factor that’s helping greatly is that the percentage of properties selling at distressed pricing is at the lowest level since mid 2009, due of course to rising rents and rising occupancies in most markets.

CoStar’s U.S. Value-Weighted Composite Index and the U.S. Equal-Weighted Composite Index both posted year over year gains in May 2012, which is a pretty good sign that the recovery is reaching most markets and most segments of the market.  .

CoStar’s U.S. Value-Weighted Composite Index weights each repeat sale by transaction size or value and is heavily influenced by larger transactions. The index has hit a three year high, reflecting the focus of investors for high-end assets, especially within primary coastal metro markets and for high quality multifamily assets.

The 6.6% increase in the Equal Weighted Composite index in May over May last year is the largest increase since the beginning of the great recession in 2007.  Pricing shows the uptick in general quality commercial properties in just about all markets.

By the way, I always need single tenant, triple net and absolute net, long corporate lease, investment quality retail properties for sale for 1031 exchanges.