S&P Tracks Commercial Real Estate in New Indexes

A news release said the indexes measure the change in commercial real estate prices by property sector and geographic region. The S&P/GRA Commercial Real Estate Indices are created jointly with GRA, the real estate research and investment management group of Charles Schwab Investment Management.

According to the announcement, the S&P/GRA Commercial Real Estate Indices are composed of ten commercial real estate indexes:

• a national composite;
• five geographic regions (Desert Mountain West, Mid-Atlantic South, Midwest, Northeast, and Pacific West); and
• four national property sectors (apartments, office, retail, and warehouse).

S&P said, each month, GRA collects and codes thousands of completed commercial real estate transactions to provide the foundation for the price-based indexes. The indexes are maintained and published by Standard & Poor’s and GRA.

The S&P/GRA Commercial Real Estate Indices are calculated to reflect underlying real estate and capital market fundamentals by measuring the change in commercial real estate prices by property sector and geographic region.

Reported index values are based on a three-month rolling average transaction price per square foot and are computed using a stock value, or market capitalization-weighted, methodology. This approach utilizes average transaction prices per square foot and commercial real estate stock data to derive index levels.

“With the launch of our commercial real estate indices, Standard & Poor’s is bringing liquidity and tradability to an important and growing asset class,” said David Blitzer, Managing Director and Chairman of the Index Committee at Standard & Poor’s, in the news release. “As they are completely based on closed commercial real estate transactions, investors will be able to account for actual movements in commercial real estate prices in the U.S.”

More information is at www.spcrex.standardandpoors.com.