Ten-X Nowcast offers look at U.S. commercial property values in 2016

Irvine, CA Ten-X (formerly Auction.com), the nation’s leading online real estate marketplace, has released its latest Ten-X Commercial Real Estate (CRE) Nowcast which reveals that commercial valuations in January increased 19 basis points from December, the slowest increase since early 2014 across the five major commercial real estate sectors.

“The first reading on commercial property markets in 2016 shows property values increasing, but still at a slower pace as the previously divergent growth rates of the different property segments continue to converge,” said Ten-X chief economist Peter Muoio.

Three property segments saw valuations increase in January according to the pricing index, which combines Google Trends data, Ten-X’s proprietary transaction database and investor surveys to forecast CRE pricing trends in real time. Retail valuations increased 58 basis points for the month and apartment increased 39 basis points, while the most significant gain was seen in the industrial sector, which rose 215 basis points following a standout performance in December.

“Of particular interest this month is the increased valuation in retail properties in light of the fact that e-retail now accounts for a larger portion of consumer spending,” said Muoio. “We’ll continue to watch this sector closely to see if retail’s value gains are being driven primarily by capital flows and sentiment, which could mean that this sector is at risk of weaker readings in the future.”

Office valuations slowed during the month, dropping 65 basis points and hotel valuations continued their downward trend, dropping 122 basis points for the month following similarly lackluster showings in November and December. Muoio noted that because Google search trends were negative on the office sector, there could be fears among investors of an economic slowdown filtering through to the office segment.

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 (formerly Auction.com) is the nation’s leading online real estate marketplace, having sold 200,000+ residential and commercial properties totaling more than $37 billion since 2007. Leveraging desktop and mobile technology, Ten-X allows people to safely and easily complete real estate transactions entirely online.

Ten-X empowers consumers, investors and real estate brokers with unprecedented levels of flexibility, control and simplicity – and the convenience of buying and selling properties whenever they want and from wherever they are. As real estate continues to move online, Ten-X is uniquely positioned to be at the forefront of this dramatic behavioral shift.

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.