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U.S. Commercial Property Values See An Uptick In Growth According To Ten-X Commercial Real Estate Nowcast
While hotel sector pricing continues deteriorating, all other major CRE sectors see a growth increase in April

IRVINE, Calif. and SILICON VALLEY, Calif., April 28, 2016 /PRNewswire/ -- Ten-X, 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 0.6 percent (56 basis points) month-over-month in April, a 7.0-percent increase from one year ago — back above its year-end 2015 level.

Ten-X (PRNewsFoto/Ten-X)

"Even though the April all-sector increase is significantly stronger than the prior month's slight gain of 0.2 percent, this still is the slowest annual growth rate from pricing for the cycle," said Ten-X Chief Economist Peter Muoio. "April's uptick in growth was seen across all major CRE sectors except hotel, where that segment's fundamentals, as well as its pricing, continue dwindling. Meanwhile, the apartment sector displays the strongest pricing trends with a 1.8-percent gain in April."

The Ten-X Hotel Nowcast dipped 1 percent from March to April, marking its sixth consecutive monthly decline. Hotels are now up just 0.5 percent year over year. As hotel fundamentals and pricing keep steadily worsening, so did occupancies in Q1, as supply exceeded demand for the first time this cycle. Sagging Google search trends and lower pricing on the Ten-X platform also are contributing to the continued hotel decline.

Meanwhile, other CRE sectors prosper. The apartment sector is the industry's strongest, continuing to display the most promising pricing trends, as the Ten-X Apartment Nowcast shows a 1.8-percent gain in April. Despite its performance, though, the apartment nowcast is up just 8.9 percent year over year, marking its lowest reading since March 2015. Apartment investors remain more cautious on cap rates than in past months, even while Google search trends and pricing on the Ten-X platform remain strong. After three straight monthly declines, the Ten-X Office Nowcast reversed course in April, gaining 0.7 percent. It's just 2.2-percent higher than a year ago, though, its lowest level of the cycle. The April Office Nowcast was lifted by stronger pricing on the Ten-X platform, improved investor outlooks and stronger Google search terms.

The retail and industrial nowcasts both saw gains in April. The Ten-X Retail Nowcast continued its steady gains with a 0.9 percent April increase, up 9.4 percent from a year ago. Retail was lifted by higher investor expectations while online search trends dragged. Industrial saw a more modest 0.4 percent April gain, though it still remains a healthy 16.4 percent higher than a year ago — the strongest reading of any of the five CRE segments. Investors continue with strong industrial expectations, and Google search trends remain supportive of pricing.

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

Sector

Nowcast Index

Month-Over-Month %
Change

Year-Over-Year
% Change

Office

163.7

+0.7%

+2.2%

Apartment

192.1

+1.8%

+8.9%

Retail

170.5

+0.9%

+9.4%

Industrial

164.7

+0.4%

+16.4%

Hotel

195.6

-1.0%

+0.5%

All Property Types

177.3

+0.6%

+7.0%

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 is the nation's leading online real estate marketplace and the parent to Ten-X Homes, Ten-X Commercial and Auction.com. To date, the company has sold 200,000+ residential and commercial properties totaling more than $37 billion. Leveraging desktop and mobile technology, Ten-X allows people to safely and easily complete real estate transactions entirely online. 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; Katherine Lambert, klambert@hoytorg.com; (310) 373-0103
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