CRE Recovery Begins in Small Markets

Smaller, less expensive properties are becoming more attractive to buyers, according to CoStar’s Commercial Repeat Sales Indices. The move toward lower-priced properties is seen in CoStar’s equal-weighted U.S. Composite Index, which grew year-over-year and picked up momentum over the past six months.

The equal-weighted index gained 1.0 percent in April, and the value-weighted index lost 2.2 percent, though both are up year-over-year. The report included 774 repeat sales in April and more than 100,000 repeat sales since 1996. The equal-weighted weights each repeat sale equally and is heavily influenced by many smaller transactions, while the value-weighted index measures repeat sales by transaction size or value and is influenced by larger transactions.

The gain in the equal-weighted index and the decline in the value-weighted index indicates a shift to more transaction activity in smaller, lower-priced properties. The CoStar report also found that for the first time since the recession, time-on-market has declined for for-sale commercial properties. Additionally, the gap between asking price and final sale price has narrowed for the first four months of 2012 at a rate not seen since 2006.