Commercial Property Sales Were More Than 150 Percent Greater in May 2011 Compared to May 2010
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Liquidity is finally returning to commercial real estate and it’s not just distressed properties. CoStar reports that May 2011 sales are more than 150 percent greater than May 2010—with a nearly doubling of the average sales price. May 2010 saw an average price of what CoStar refers to as investment-grade real estate of $16.9 million compared to $33.2 million this May. General commercial property average price rose from $1.65 million to $1.7 million.
The dollar volume of investment grade real estate was up 191 percent and represented 79.2 percent of total sales while general real estate was up 62 percent.
A year ago CoStar reported that just five office markets accounted for 70 percent of all office sales. See post from July 8, 2010. That has changed significantly as investors are chasing yields and expanding to other markets. This past May saw the top 10 markets accounting for just 37.8 percent of total commercial sales.
Distressed property represented 28.3 percent of all sales in May 2011, down from 29.4 percent in April. The greatest distressed property segment was hospitality (37.8 percent) followed by multifamily (30.9 percent), office (27.1 percent) and Industrial (23 percent).
The bottom line is that commercial sales volumes continue to rise as investors and liquidity returns to the commercial property sector.