August Ten-X CRE Nowcast Marks Strongest Monthly Valuation Increase This Year

IRVINE, Calif., and SILICON VALLEY, Calif., Aug. 25, 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 1.9 percent in August despite slowing deal volume, marking the strongest monthly increase this year and a 6.4 percent year-over-year gain.

"The recent string of monthly increases in commercial real estate valuations confirms that pricing remains on the upswing following the weakness seen earlier this year," said Ten-X Chief Economist Peter Muoio. "The strength displayed across our nowcasts this summer is an important signal to real estate investors that despite the array of global challenges and the heightened uncertainty brought about by the US presidential election, commercial real estate's pricing growth remains on track."  

In addition to August's strong overall gain, pricing increased across all property segments for the first time since late 2015. The Ten-X Office CRE Nowcast posted the strongest gain for the third consecutive month, rising 5.8 percent from July and 13.3 percent above its year-ago level. Strong pricing of Office deals transacted on the Ten-X platform contributed to this gain.

"The strength in office pricing is oddly juxtaposed against still tepid fundamentals," said Muoio, noting that office vacancies remained flat in the second quarter and the pace of effective rent growth slowed. "Office pricing has now fully climbed out of the hole it fell into early this year and is at a level where it would have been if growth had continued at its pre-swoon pace." 

The Ten-X Multifamily CRE Nowcast, which has posted the most consistent gains this year, increased 1.9 percent from July and 8.7 percent above last year's level. While the multifamily nowcast showed some weakness in relevant Google search trends during the month, deal pricing on the Ten-X platform was strong and investors surveyed continued to indicate a bullish outlook for the segment.  Multifamily vacancies were stable nationwide in the second quarter and rent growth accelerated.  According to Muoio, "Investors may be looking past nearer term cyclical deterioration from increased development and focusing on the strong long-term social and demographic trends supporting this property segment."

The Ten-X Industrial Nowcast saw its first gain since April, increasing 1.8 percent from July and 12.6 percent above its year-ago level. Industrial properties continue to benefit from demand emanating out of e-commerce as well as bricks and mortar retailers upping their customer fulfillment game in order to remain competitive.  Warehouse vacancies fell another 10 bps in the second quarter and rents keep chugging along at a healthy pace.

The Ten-X Hotel Nowcast showed a modest 0.1 percent gain in August following July's flat reading, suggesting that the freefall in hospitality pricing may be over, at least temporarily. However, hotel pricing remains well below the peak hit by the Ten-X Nowcast in October 2015 and the minimal gain seen in August reflects slightly more bullish views among investors surveyed, as both Google search trends and Ten-X platform deal pricing remained weak.  

Retail pricing also increased slightly in August, rising 0.2 percent from July and 6.5 percent from a year ago as fundamentals continue along their slow path to recovery while investors remain wary of e-retail's impact on bricks and mortar stores. 

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

About the Ten-X CRE Nowcast:

The Ten-X CRE Nowcast is a price index covering the entire U.S. commercial market, including individual price trends for each major market sector – office, multifamily, retail, industrial and hotel. 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.

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