by Calculated Risk on 1/16/2011 02:22:00 PM

Some interesting comments on the trifurcation of the commercial real estate market ...

From CoStar: CoStar Commercial Repeat-Sale Indices

• CoStar’s three national commercial real estate repeat sales indices were down for the month of November despite notable price increases for high profile core transactions in Washington D.C. and New York City

• The Investment Grade index was down 4.1% for the month giving back some, but not all of the 8.1% net gains observed over August, September and October. Notwithstanding November’s decline, the Investment Grade index is still up 7.6% since its cyclical low earlier this year.

Negative national trends contrast with the strong and increasing interest in trophy properties within core markets where prices have continued to climb during 2010. Collectively they show a market that is not just bifurcated but possibly trifurcated, with trophy assets commanding bidding wars, smaller assets languishing, particularly in secondary and tertiary markets; and distressed properties trickling onto the market as banks recycle assets at a relatively measured pace.
emphasis added

Click on graph for larger image in new window.

This graph from CoStar shows the indexes for investment grade, general commercial and a composite index. All three indexes declined in November.

It is important to remember that there are very few CRE transactions (compared to residential), and that there is a high percentage of distressed sales, so prices are very volatile.

Earlier:
• Summary for Week ending January 15th
• Schedule for Week of January 16th