IRVINE and SILICON VALLEY, Calif., July 28, 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 1.1 percent in July, marking the strongest monthly increase this year and a 5.2 percent year-over-year gain.
"This recent string of monthly increases confirms that overall pricing of commercial real estate remains on the upswing following the weakness seen earlier this year," said Ten-X Chief Economist Peter Muoio. "That said, we are noticing distinct differences across the five major property sectors, with each telling its own story."
The office, apartment and retail sectors all saw monthly increases in July, with the Ten-X Office CRE Nowcast posting the strongest gain for the second consecutive month, rising 4.8 percent from June and 7.6 percent above its year-ago level, the best year-over-year gain noted for any of the commercial sectors since January. Strong pricing of Office deals transacted on the Ten-X platform contributed to this gain.
The Ten-X Apartment CRE Nowcast, which has posted the most consistent gains this year, increased 1.1 percent in July from the previous month and 6.8 percent above last year's level.
"The Apartment sector is unencumbered by technology driven shifts that have impaired demand for many other property segments and has long-term demand potential represented by a myriad of social changes that are currently favoring renting," noted Muoio. "We will be watching closely to see if the sector's consistent growth continues, but our survey results show a very positive outlook towards the segment among investors."
Retail pricing continues to show far more strength than underlying fundamentals. The Ten-X Retail CRE Nowcast posted a modest increase in July, increasing 0.5 percent from June and pushing it 6.4 percent above its year-ago level. While surveys indicate bullishness towards the segment, buyers on the Ten-X platform appear to be warier, marking a shift from previous months of stronger retail pricing.
The Ten-X Hotel CRE Nowcast was flat for July following a 7.6 percent drop between November and June. Hotel fundamentals have been weakening in the face of the increasing pace of new supply, weak economies abroad, a stronger dollar and competition from AirBnB.
Meanwhile, Industrial was the only segment to post a decline for the month, marking the third consecutive drop for this formerly white-hot property segment. The Ten-X Industrial CRE Nowcast declined 1.2 percent from June, marking its weakest month since 2011. Annual gains have slowed to 11.7 percent from a peak rate of 19.3 percent at the end of last year. Still, the Industrial sector shows the strongest annual growth rate of any property segment.
"Despite the falloff in trade and weakness in energy-related industrial demand, the Industrial sector has sustained gains spurred by the demand for distribution and fulfillment centers needed for the fast growing e-retail businesses," said Muoio. "That said, this recent pricing weakness may reflect wariness among investors as to whether this positive roll can continue in the longer term."
July Nowcast Results: All price indexes are based at 100 from January 2011
Month-Over-Month % Change
Year-Over-Year % Change
All Property Types
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.
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.