April marked the second consecutive monthly gain in property prices after declines to start the year, according to the latest monthly CoStar Commercial Repeat Sale Indices.
Both the value-weighted U.S. Composite Index, which reflects larger asset sales common in major markets, and the equal-weighted U.S. Composite Index, which reflects the more numerous but lower-priced property sales typical of smaller, secondary markets, gained by 1.4% in April.
Both indices are now up by more than 7% over the past 12 months as the market has recovered from price decreases in the second quarter of 2020 when the COVID-19 pandemic ramped up.
The volume of repeat sales hit its highest level since June 2020 as well. When a property is sold more than once, the price change from the pair of first and second sales is used to calculate price movement, and those sales pairs are used to create a price index.
The number of transactions for the first four months of 2021 is roughly 18% greater than the first four months of 2020, which is a good sign for the return to typical liquidity conditions.
General commercial distressed sales, which are influenced by smaller, lower-priced properties, remained at 0.9% of total trades in April, and investment-grade distressed sales, those affected by higher-value properties, held at 0.5%. Both rates are low compared to their five-year averages of 1.6% and 0.9%. The continued low share of distressed sales demonstrates relatively healthy liquidity conditions.
The average days on the market for sales in April was 221, better than a recent peak of 223 days in January and lower than the five-year average of 229 days.
Other metrics were encouraging, as well: The share of trades withdrawn in April was 26.6%, down about 2 percentage points from the July 2020 peak of 28.7%, and sellers in April received 92.7% of asking price at sale, improved from the July 2020 trough of 91.8%. Deal execution appeared strong in April, a positive sign for the continuation of an economic recovery.
CoStar’s sales indices provide the market’s first look at commercial real estate pricing trends. Based on 1,405 repeat-sale pairs in April and more than 242,803 repeat sales since 1996, the indices offer a broad measure of sales activity.