General commercial real estate and the broad-based CoStar composite index for all commercial real estate reversed the positive trend reported in last month's findings and came in at -3.48% and -1.38% respectively for the month of August. This up-and-down pattern has repeated itself for both investment grade and general real estate, with each of them often heading in opposite directions during the same month.
Repeat sales values for investment grade commercial property reversed their negative trend from July and moved positive again with a 3.73% limb in August. We continue to see a significant spread in cap rates and prices from the larger property in prime core markets to the property in second- and third-tier broader markets. Even with tighter financing, there appears to be plenty of institutional and REIT capital oriented to the lower-risk core markets.
For the past three months, all three indices are negative at -3.92% for the broad general index, -3.24% for investment grade and -3.92% for the composite. For the past 12 months, all three indices are down approximately 10% to 11%.
Over the past two years, the general real estate index is down 24%, investment grade is down 32% and the composite is down 26%.
From the peak in February of 2008, the general real estate price index is down 27%, the investment grade down 34% and the composite index down 29%.
Costar released its monthly commerical real estate price index. In August prices fell across the board due to a surge in distressed sales which accounted for over 20% of all sales. From the release: