Ten-X Offers First Glimpse at Commercial Real Estate Midyear Pricing Trends

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From: PR Newswire

IRVINE and SILICON VALLEY, Calif., June 23, 2016 /PRNewswire/ -- Ten-X, the nation's leading online real estate transaction 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 0.3 percent month-over-month and 5 percent year-over-year in June.

"This marks the fourth consecutive monthly increase for the Ten-X Commercial CRE Nowcast and solidifies the view that the commercial real estate market has shaken off the impact of financial market issues and recession fears that 2016 started with," said Ten-X Chief Economist Peter Muoio. "However, it should be noted that June's 5 percent year-on-year increase is the weakest we've seen so far in this cycle, reflecting both robust year-ago comparisons and the impact of the downdraft from earlier this year. This slowdown in annual growth is evident across all property segments."

The office, apartment and retail sectors all saw monthly increases in June, with the Ten-X Office CRE Nowcast posting the strongest gain, rising 2.5 percent from May and nearly returning to its December 2015 cyclical peak. In many ways the nowcast is reflecting office fundamentals, most notably indicating that pricing has remained range-bound over recent months amid its volatility.

June's apartment sector nowcast is up 0.8 percent from the previous month, marking its seventh consecutive monthly gain. While an increasing number of US apartment markets are now seeing vacancies rise amid increased development, the outlook for supply appears to be easing. While rising vacancies and slower rent growth are moderating the overall outlook for this segment, investors are focusing on long-term positive trends such as later marriage ages, increased single-headed households, high student debt loads and wariness about owning.

The Ten-X Retail Nowcast continued to show strength beyond its underlying market fundamentals in June, increasing 0.4 percent in June and pushing it 6.5 percent above the midyear 2015 level. Pricing on the Ten-X platform for retail properties has been strong and contributed to this month's gain.

Declines were seen in both the Ten-X Industrial and Hotel Nowcasts in June. While the industrial nowcast's 0.5 percent decline followed a 0.7 percent decline in May, the index stands a robust 13.4 percent above its year-ago level – the strongest annual gain among the property segment nowcasts.

"Industrial segment fundamentals have remained strong despite the slowdown in key global economies and in the energy segment, as a boost by e-commerce related absorption has counteracted these negatives," commented Muoio. "However, the recent nowcast trends suggest that investors are wary of the impact of the more difficult global economic environment on industrial properties."

The Ten-X Hotel Nowcast resumed its downward movement after a slight increase in May, declining 1 percent month over month and 2.3 percent year over year. Google search trends were decidedly negative and Situs/RERC surveys continued to reveal a "sour mood" among market participants as supply begins to outpace demand, and the threat to pricing and demand from Airbnb takes hold as a legitimate concern.

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

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 transaction 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 nearly $39 billion. Leveraging desktop and mobile technology, Ten-X allows people to safely and easily complete real estate transactions 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.

Tags: Corporate Rebrand Auction.com Ten-X Real Estate Commercial Real Estate