US commercial property bouncing back
Low-end property has driven general CRE prices above the July 2011 average – according to commercial property statistics leader CoStar.
Figures for June 2012 reached a disappointing stalemate following consecutive gains in preceding months; however the latest Commercial Repeat Sales Indices (CCRSI) report shows substantial gains in less expensive commercial property, with the highest price investment grade property also witnessing a steady increase.
CoStar’s Value-Weighted Composite Index for July 2012 found that CRE prices had risen by 11.3% over the same period in 2011.
Recovery continues to be driven by higher priced investments, with the index showing a 33% increase from its lowest point in January 2010 – still 18.7% below its September 2007 peak. Prices in the general commercial have begun to catch up; with the Equal-Weighted Composite Index indicating that pricing in the broader market is being driven by lower end properties with an increase of 5.9% in July 2012 – up 6.3% from March 2011.
Search Office Space CEO Richard Smith commented: “This is obviously great news for our US market. Such increases underline a new confidence in the commercial property industry, with growth likely to encourage a host of new business centres and potentially lead to a snowballing effect. Once again, fluctuating markets show the value of pragmatism that can only be assured with versatile serviced offices.”
The report also revealed improving market factors elsewhere, with a 2% decrease in the average time properties were staying on the market and an 11.4% decrease in the withdrawal of offers.
As tentative signs of recovery continue, serviced commercial offices continue to play an ever-expanding role in offering a professional and economically viable work-space option to start-up industries and SMEs.