FREQUENTLY ASKED QUESTIONS


1) How are the CCRSI computed?   

The CCRSI indices are based on observed changes in individual property prices.  Price data are gathered and confirmed by CoStar researchers for commercial property sale transactions across the country. For each transaction, the most recent sales price is compared with the price from the previous sale of the same property. When an earlier transaction is found, the two transactions are matched into a “sale pair.” Sale pairs are designed to yield the price change for the same property while holding the quality and size of each building constant. More detailed technical description of the methodology can be found here.


2) How often will the CCRSI be reported? 

National-level indices are published monthly. Sectoral and regional indices are published quarterly.  The release date occurs during the second full week of each month. To provide a suitable research period for confirming and including the vast majority of property sales in the analysis, the indices are released approximately six weeks following the last day of the month being analyzed. For instance, the August CCRSI release will include the sales that closed in June. This timeframe ensures that any revisions can be kept to a minimum as new property sales data are collected. Given this timeframe, the CCRSI releases in February, May, August, and November each year will include the quarterly sectoral and regional indices in addition to the monthly national indices. Monthly updates for CCRSI’s national indices are included in each release. 


3) Is the CCRSI dataset available and is there a cost?

The dataset used to calculate the monthly and quarterly CCRSI indices is available in spreadsheet format and can be downloaded from the CCRSI web site.  The CCRSI dataset and release containing expert analysis and commentary are both available free of charge.


4) Is the CCRSI available for individual metro areas?

Yes, a set of metro level by property type price indices have been developed as an extension of CCRSI. Using the technique of hedonic price indexing (HPI), CoStar’s metro price indices bear the same merit of CCRSI, which captures the price change while controlling for variation in property quality. However, because these metro price indices require specialized analysis and interpretation, there is a nominal charge. For inquires on availability and cost, please contact CoStar/PPR Sales at (617) 443-3100.


5) Are CCRSI indices equal-weighted or value-weighted?

The monthly U.S. Composite Index consists of both equal-weighted and value-weighted versions. All other indices in the CCRSI release, i.e. sectorial and regional, are equal-weighted.  Value-weighted versions of the sectorial and regional indices are available upon request. 


6) What is the difference between equal-weighted and value-weighted indices? Why the need for two weighting schemes?

Equal-weighted and value-weighted offer investors and analysts different ways of observing price changes in the same market, yielding different insights. In an equal-weighted index, every transaction is weighted equally, regardless of the value of the transaction, whereas the value-weighted index weights price changes by the value of each transaction.  As a result, an equal-weighted index is heavily influenced by low-value deals where transaction frequency is the highest, and therefore is considered more relevant for measuring the performance of average properties. A value-weighted index, on the other hand, is most sensitive to price variations of high-value properties, and is often used for analyzing capital flows.

In general, the broader the coverage area, and the greater number and more diversity of properties included in the analysis, the more noticeable difference in the results between the two weighting schemes.  At a more granular level, the benefit and usefulness of using two weighting schemes diminishes. For instance, there is little difference between equal-weighted and value-weighted indices for industrial property prices because there is a much higher degree of homogeneity at the sector level.  This is the primary reason we address both equal- and value-weighted CCRSI indices only at the national level in our accompanying commentary.


7) What is the difference between the Investment Grade Index and General Commercial Index? Are they equal- or value-weighted? 

Different investors have different investment strategies. Some are focused on higher quality and more expensive properties. Others focus on the other end of the spectrum. To more effectively capture price movement of low-end and high-end market segments, CoStar provides two equal-weighted indices by market tiers or segments, both determined by the physical characteristics of properties. CoStar’s U.S. Investment Grade index reflects the high-end of the market and the U.S. General Commercial index focuses on the lower end of the market. Because these two indices provide information on the two price ends of the commercial property spectrum, they are analogous to two weighting schemes. However, they are more directly related to physical characteristics of the properties.


8) How are Investment Grade and General Commercial Properties Defined?

Investment Grade properties as a group consist of larger-sized, reasonable-quality properties that match the type most often purchased by institutional investors.  More specifically, this category includes 4-Star and 5-Star office properties that have more than 35,000 square feet of RBA (rentable building area), or industrial buildings larger than 80,000 square feet of RBA, flex buildings larger than 55,000 square feet of RBA, retail properties larger than 25,000 square feet of RBA, multifamily buildings with 90,000 square feet of RBA, and more than 125,000 square feet of RBA for hotels.

Any properties not meeting the Investment Grade criteria belong to the General Commercial category.


9) What is the difference between CCRSI and Moody’s CPPI?

While both the CoStar CCRSI and Moody’s CPPI are repeat-sale indices, each uses different methodologies and sales data sources resulting in important differences between the two.  Moody’s CPPI tracks prices for commercial property based on the Real Capital Analytics (RCA) database, which collects price information for commercial property that sells for more than a certain dollar value, $5 million before 2005 and $2.5 million from 2005 onward. This incomplete data collection practice is likely to result in a biased sample and index. For instance, properties that increase in value and sell for prices greater than $2.5 million but which previously sold for less than $2.5 million are likely to be omitted from inclusion and result in a downward bias for the index. 

CoStar collects commercial property transaction data at all points in the price range.  Also, in order to differentiate price movement of the high end and low end of the market, CoStar uses physical characteristics instead of price to segment the market in order to avoid the potential for ambiguity and bias.  For more detailed discussion of the CCRSI methodology and research approach, please see the CoStar Commercial Repeat-Sales Indices Methodology by Ruijue Peng, et.al.  For more information on the Moody’s CPPI, please refer to the paper by Geltner and Pollakowski published by the MIT Center for Real Estate.

CCRSI also differs from CPPI in weighting methodology. CCRSI provides both equal- and value-weighted indices at the national, regional and sectoral levels. CPPI, on the other hand, was initially developed as an equal-weighted index only. Early in 2012, CPPI ceased publishing its index and altered its methodology. In its current iteration, CPPI’s national index is now value-weighted aiming to capture capital flow, whereas all other indices remain equal-weighted. However, unlike CCRSI’s value-weighted national Composite index, CPPI’s national index is not weighted by the transaction value of each property sale over time. Rather, CPPI is structured as a combined sectoral equal-weighted index, with a sectoral weighting based on a moving average of historical transaction values. As a result of this so-called “smoothing” technique, the CPPI index is not sensitive to the ups and downs of capital flow.


10) Will the CCSRI history be revised?

Yes, CCRSI indexes will be revised monthly due to the addition of new month and new historical data. Unlike many other indices, CCRSI’s history is not locked. Since it launched in 2010, CRRSI history has remained stable, with minor revisions reflected in each month’s re-estimation. This historical stability suggests that CCRSI is statistically significant, and therefore an artificial lock-down of its historical data is not necessary. If the CCSRI becomes a traded index, then we will reconsider establishing a firm lock-down on the figures based on input from market players.


11) What are the top prime metro markets by property type?



12) Which metros are included in each of the four CCRSI regional indices?

South

West

Northeast

Midwest

Asheville

Albuquerque

Albany/Schenectady/Troy

Chicago

Atlanta

Bakersfield

Boston

Cincinnati/Dayton

Augusta/Richmond County

Boise City/Nampa

Buffalo/Niagara Falls

Cleveland

Austin

Bremerton/Silverdale

Erie

Columbus

Baltimore

Colorado Springs

Hartford

Davenport/Moline/Rock Island

Baton Rouge

Denver

Long Island (New York)

Des Moines

Beaumont/Port Arthur

East Bay/Oakland

New York City

Detroit

Birmingham

Fresno

Northern New Jersey

Duluth

Brownsville/Harlingen

Hawaii

Philadelphia

Evansville

Charleston WV

Inland Empire (California)

Pittsburgh

Fort Wayne

Charleston/N Charleston

Las Vegas

Portland/South Portland

Green Bay

Charlotte

Los Angeles

Providence

Indianapolis

Chattanooga

Marin/Sonoma

Rochester

Kansas City

Columbia

Olympia

Syracuse

Lincoln

Corpus Christi

Orange (California)

Utica/Rome

Milwaukee/Madison

Dallas/Ft Worth

Phoenix

Westchester/So Connecticut

Minneapolis/St Paul

Deltona/Daytona Beach

Portland

 

Omaha/Council Bluffs

El Paso

Reno/Sparks

 

Peoria

Fayetteville

Sacramento

 

South Bend/Mishawaka

Fayetteville/Springdale/Rogers

Salinas

 

Springfield

Fort Smith

Salt Lake City

 

St. Louis

Greensboro/Winston-Salem

San Diego

 

Toledo

Greenville/Spartanburg

San Francisco

 

West Michigan

Hampton Roads

San Luis Obispo/Paso Robles

 

Wichita

Houston

Santa Barbara/St. Maria/Goleta

 

Youngstown/Warren/Boardman

Huntington/Ashland

Santa Cruz/Watsonville

 

 

Huntsville

Seattle/Puget Sound

 

 

Jackson

South Bay/San Jose

 

 

Jacksonville (Florida)

Spokane

 

 

Killeen/Temple/Fort Hood

Stockton/Modesto

 

 

Kingsport/Bristol/Bristol

Tucson

 

 

Knoxville

Visalia/Porterville

 

 

Lafayette

 

 

Lexington/Fayette

 

 

 

Little Rock/N Little Rock

 

 

 

Louisville

 

 

 

Lubbock

 

 

 

McAllen/Edinburg/Pharr

 

 

 

Memphis

 

 

 

Mobile

 

 

 

Montgomery

 

 

 

Myrtle Beach/Conway

 

 

 

Nashville

 

 

 

New Orleans/Metairie/Kenner

 

 

 

Ocala

 

 

 

Oklahoma City

 

 

 

Orlando

 

 

 

Pensacola

 

 

 

Port St Lucie/Fort Pierce

 

 

 

Raleigh/Durham

 

 

 

Richmond VA

 

 

 

Roanoke

 

 

 

San Antonio

 

 

 

Savannah

 

 

 

Shreveport/Bossier City

 

 

 

South Florida

 

 

 

Southwest Florida

 

 

 

Tallahassee

 

 

 

Tampa/St Petersburg

 

 

 

Tulsa

 

 

 

Washington DC

 

 

 

Wilmington (North Carolina)

 

 

 

 

 

 

 


13) What filters and exclusions are used in the development of the set of indices?

Filters

a.   “Flipped” property is filtered out based on eliminating properties that are sold twice within 12 months. 

b.   Extreme price movements are filtered out.  If the annual average price change between two sales reveals changes in excess of 50% per year or -40% per year these sales are excluded.  For land the filter is for anything exceeding 60% per year and or -50% per year on the downside.

Exclusions and Rules

a.    Sold land of less than 1/10th acre in size.

b.    Public recording sale that was not verified by CoStar.

c.    Sales where no price was stated.

d.    Any property smaller than 2500 sq. ft. (other than multifamily)

e.    Any multifamily with less than 10 units.

f.     Any property sale marked with the following conditions are excluded:

  • Ground Lease (Leased Fee) existed

  • Ground Lease (Leasehold) existed

  • Direct Exchange Property was part of an Assemblage

  • Business Value was Included in the sale

  • Build to Suit

  • Estate/Probate Sale

  • Building or Land Contamination Issue was present

  • Deferred Maintenance was noted

  • Excess Land was included in the sale

  • Land Contract sale (seller financing)

  • Partial Interest Transfer

  • Redevelopment Project

  • Building in Shell Condition

h.    Portfolio sales are excluded unless the entire portfolio sells twice with no change in the properties involved.

i.     If a property is recorded more than once in the same day, double/triple escrow for instance, the first recorded sale is used.


14) Will the underlying sales pair data be released?

While all national indices, regional and sectoral indices are available to public free of charge, the underlying sales-pair data from which the indices are constructed will not be released.

15) Are distressed property sales included in the CCRSI calculation? And if so, what constitutes a distressed sale?

Distressed property sales are included in all CCRSI indices, composite and sector/property indices alike. Because these sales are part of the property sales market dynamic, an index that did not include them would be biased upward. With that said, we do provide both distressed and non-distressed versions for two of our equal-weighted composite indices, equal-weighted U.S. Composite index and the Investment Grade index, mainly to facilitate impact analysis of distressed sales.

We define a property sale as being distressed if any of the following sale conditions are flagged for that property sale in the CoStar COMPS database:

  • Auction Sale (Sale Condition)
  • Deed In Lieu Of Foreclosure (Below Market Reason)
  • Distress Sale (Sale Condition)
  • Foreclosure (Below Market Reason)
  • REO Sale (Sale Condition)
  • Short Sale (Sale Condition)

Also, to further clarify, for a property sales pair to be considered distressed in the CCRSI, only the most recent sale of the property must have one of the above sale conditions, the condition of the previous sale is not a factor in determining if the sale qualifies as distressed.

For more information about CCRSI, please contact TTrainor@costar.com.