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“Properties Previously Bought at Peak Exerting Downward Pressure on Current Prices” – Costar May 19, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News, Uncategorized.
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I don’t think many in the commercial real estate business would be surprised by Costar’s headline. It’s significant, however, that we’re better able to decipher the pricing performance for properties purchased in the “pre-bubble” buying spree. The latest Costar Commercial Repeat-Sales Index shows that the commercial market continues its correction. 

Over 70% of the deals purchased in 2005-2007, and the later sold in 2011, have sold below their previous acquisition price. We believe the landscape for deal making is improving daily, but for many owners (and lenders with the troubled loans that were originated during this period) it will be a challenge to recoup values.  First quarter 2011 repeat sales of  “Investment Grade” properties fared worse than “General” grade assets. The performance in the investments market has impacted the West regions overall performance and prices remain down 38% from their peak in mid 2007.  

Retail posted a 1.6% gain while office declined 11.7%, industrial declined 5.1% and multifamily declined 3.1%.

There’s perhaps a silver lining for retail property owners. According to the report, retail is the only property type that showed a modest pricing increase in 2011.  Check out the entire Costar report by clicking here.

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