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U.S. Commercial Property Values Continue Slowing According To Ten-X Commercial Real Estate Nowcast
A healthy apartment sector boosts an otherwise lackluster showing in March

IRVINE and SILICON VALLEY, Calif., March 24, 2016 /PRNewswire/ -- Ten-X (formerly Auction.com), the nation's leading online real estate marketplace, has released its latest Ten-X Commercial Real Estate (CRE) Nowcast. The pricing index, which combines Google Trends data, Ten-X's proprietary transaction data and investor surveys to forecast CRE pricing trends in real time, reveals that commercial valuations increased by 0.2 percent (19 basis points) in March, a 7.6 percent increase from one year ago – the slowest annual increase since the end of 2014.

Ten-X

"The March all-sector increase actually masks weakness across all property segments except for apartments," said Ten-X Chief Economist Peter Muoio. "While our all-segment nowcast is down slightly from its end-of-year 2015 level, the apartment sector is enjoying strong pricing on the Ten-X platform as there has been positive traction from investors who like the direction apartment cap rates are heading."

With all other property segments either flat or down in March, the increase in the apartment nowcast kept this month's all-segment nowcast afloat. Apartment valuations in March increased a solid 2.3 percent (233 basis points), signaling that sector's strongest gain since May 2015. Apartment valuations were up 9.5 percent year over year, putting the sector in solid positive territory for Q1.

Declines in the hotel and office segments raised eyebrows in March. Hotel valuations dropped 1.2 percent (124 basis points) from February to March, signaling the fifth-straight monthly decline, leaving the sector up only 2.6 percent year over year — the hotel segment's weakest annual gain in this cycle. Office valuations also dipped in March, falling 0.1 percent (14 basis points) from February, and are up just 2.2 percent from their year-ago level, also marking the sector's weakest annual gain in this cycle. There are indications that office rents are weakening, even in some of the hotter markets, while many non-tech markets also continue to drag.

Meanwhile, the retail and industrial sectors remained flat in March. Retail valuations were up a solid 8.7 percent year over year – even as investors and lenders remain concerned by e-retail gains – and industrial increased 17.1 percent year over year. The industrial sector stands out from the other sectors as it benefits from technology driven economic shifts.

March Nowcast Results: All price indexes are based at 100 from January 2011

Sector

Nowcast Index

Month-Over-Month % Change

Year-Over-Year % Change

Office

162.5

-0.1%

+2.2%

Apartment

188.6

+2.3%

+9.5%

Retail

167.8

+0.0%

+8.7%

Industrial

164.0

+0.0%

+17.1%

Hotel

197.5

-1.2%

+2.6%

All Property Types

176.1

0.2%

+7.6%

 

About the Ten-X CRE Nowcast:
The Ten-X CRE Nowcast (formerly the Auction.com CRE Nowcast) is a price index covering the entire U.S. commercial market, including individual price trends for each major market sector – office, apartments, retail, industrial and hotels. It is based on data modeling developed by Google Chief Economist Hal Varian, who defines "nowcasting" as "contemporaneous forecasting" – the ability to predict what is happening as it occurs. Ten-X applies Varian's theories by combining publicly available and anonymous Google Trends data with its own proprietary transactional data to create a model for accurately predicting current commercial real estate activity. This data is supplemented with "real human" input through the company's partnership with Situs and their Real Estate Research Report (RERC). 

Ten-X issues its CRE Nowcast monthly after combining transactional data, related online search activity indicating purchase intent and investor survey results. The company runs multiple versions of the Nowcast model and layers in additional variables every day to improve its accuracy in predicting pricing trends across CRE sectors in key U.S. markets. Future iterations will include regional, local and individual asset-based price indicators. By analyzing current market conditions as opposed to only historical data, Ten-X is able to provide more relevant and timely insight to real estate investors, economists and government entities alike.

About Ten-X
Ten-X (formerly Auction.com) is the nation's leading online real estate marketplace, having sold 200,000+ residential and commercial properties totaling more than $37 billion since 2007. Leveraging desktop and mobile technology, Ten-X allows people to safely and easily complete real estate transactions entirely online.

Ten-X empowers consumers, investors and real estate brokers with unprecedented levels of flexibility, control and simplicity – and the convenience of buying and selling properties whenever they want and from wherever they are. As real estate continues to move online, Ten-X is uniquely positioned to be at the forefront of this dramatic behavioral shift.

Ten-X is headquartered in Irvine and Silicon Valley, Calif., and has offices in key markets nationwide. Investors in the company include Google Capital and Stone Point Capital. For more information, visit Ten-X.com.

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SOURCE Ten-X

For further information: The Hoyt Organization: Kent Barrett, kbarrett@hoytorg.com; or Katherine Lambert, klambert@hoytorg.com; both at (310) 373-0103
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