CoStar Composite Price Indices Show Momentum Shift as Pricing Growth Accelerates at Low-End of Commercial Property Market

CoStar Composite Price Indices Show Momentum Shift as Pricing Growth
Accelerates at Low-End of Commercial Property Market

High-End Price Growth Slowing as Investors Expand Their Focus to More
Secondary Markets and Property Types

WASHINGTON, June 14, 2012 (GLOBE NEWSWIRE) -- This month's CoStar Commercial
Repeat Sale Indices (CCRSI) provide the market's first look at April 2012
commercial real estate pricing. Based on 774 repeat sales in April and more
than 100,000 repeat sales since 1996, the CCRSI offers the broadest measure of
U.S. commercial real estate repeat sales activity. Also in this release,
CoStar Group includes analysis of our value-weighted composite index for the
first time. CoStar has been tracking price changes on both an equal-weighted
and a value-weighted basis since developing the CCRSI in 2010. Both indices
are comprised of the same repeat property sale transactions. The different
weighting schemes offer additional insight by analyzing price movements in
different ways. An equal-weighted index is considered more relevant for
measuring the performance of average properties, whereas a value-weighted
index is better related to capital flows in the marketplace.

June 2012 CCRSI National Results Highlights

  * APRIL PRICES MIXED: The two broadest measures of aggregate pricing for
    commercial properties within the CCRSI—the equal-weighted U.S. Composite
    Index and the value-weighted U.S. Composite Index—posted a 1% gain and a
    2.2% retreat, respectively, in April, although both advanced over year-ago
    levels. The equal-weighted index weighs each repeat-sale equally and is
    therefore heavily influenced by the more numerous smaller transactions,
    and the value-weighted index weighs each repeat-sale by transaction size
    or value and is therefore heavily influenced by larger transactions.
     
  * VALUE-WEIGHTED GAINS STRONGER UNTIL RECENTLY: The value-weighted U.S.
    Composite Index's pricing gains have been consistently stronger than its
    equal-weighted counterpart over the past two years. This suggests that
    pricing recovery has been progressing more rapidly at the top end of the
    market among the larger and more expensive assets. This mirrors the trend
    in the recovery of market fundamentals for commercial property, where
    demand for Four-Star and Five-Star office buildings, luxury apartments,
    and modern big-box warehouses has outpaced the broader market during that
    period. However, pricing trends suggest this may be shifting. (See next
    item.)
     
  * PRICING MOMENTUM SHIFTING: Despite the recent dominance of larger,
    more-expensive properties in pricing gains, momentum appears to be
    shifting to the broader market dominated by smaller, less-expensive
    properties. The value-weighted U.S. Composite Index's 6.5% year-over-year
    gain in April slowed from its double-digit growth rate throughout 2011. At
    the same time, year-over-year growth in the equal-weighted U.S. Composite
    Index has generally accelerated over the past six months. This signifies
    that buyers have begun to expand beyond large, core properties for
    property acquisitions, driving up pricing at the low end of the market for
    the first time in this cycle.
     
  * LIQUIDITY MEASURES IMPROVING: As commercial property prices rise, many
    measures of liquidity are also improving, starting with transaction
    volume. Over the past 12 months ended in April 2012, the observed
    sale-pair counts increased by 19% compared to the previous 12-month period
    ended in April 2011. This growth was slightly biased toward the Investment
    Grade segment of the market, which posted a 25% increase in observed pair
    counts over that period.
     
  * U.S. ATTRACTING EUROPEAN INVESTORS: Transaction data indicate European
    investors have played a key role in improving liquidity. The share of
    commercial property purchases by European buyers in 2012 has more than
    tripled from 2011 levels, a signal that investors may be seeking safe
    havens in the midst of the Eurozone economic turmoil.
     
  * TIME-ON-MARKET DECREASES FOR FIRST TIME SINCE RECESSION: Sellers of
    commercial property appear to be finding the market more accommodating in
    2012. Average time on market for for-sale properties has decreased this
    year for the first time since the start of the recession. Additionally,
    the gap between initial asking price and final sales price narrowed over
    the first four months of 2012 at its fastest rate since 2006.
     
  * DISTRESS LEVELS CONTINUE DECLINING: The level of distress property sales
    has been generally declining as a percentage of property sales volume over
    the past 12 months. Only 24.3% of observed trades in April 2012 were
    distressed, 12.2% lower than the peak level observed in March 2011.

Charts accompanying this release are available at
http://media.globenewswire.com/cache/9473/file/14165.pdf

About the CoStar Commercial Repeat-Sale Indices

The CoStar Commercial Repeat-Sale Indices (CCRSI) are the most comprehensive
and accurate measures of commercial real estate prices in the United States.
In addition to the national Composite Index, national Investment Grade Index
and national General Commercial Index, which we report monthly, we report
quarterly on 30 sub-indices in the CoStar index family. The sub-indices
include breakdowns by property sector (office, industrial, retail,
multifamily, hospitality and land), by region of the country (Northeast,
South, Midwest, West), by transaction size and quality (general commercial,
investment grade), and by market size (composite index of the 10 largest
metropolitan areas in the country).

The CoStar indices are constructed using a repeat sales methodology, widely
considered the most accurate measure of price changes for real estate. This
methodology measures the movement in the prices of commercial properties by
collecting data on actual transaction prices. When a property is sold more
than one time, a sales pair is created. The prices from the first and second
sales are then used to calculate price movement for the property. The
aggregated price changes from all of the sales pairs are used to create a
price index.

More charts accompanying this release are available at
http://media.globenewswire.com/cache/9473/file/14166.pdf

Contact:

For more information about CCRSI Indices, including our legal notices and
disclaimer, please visit http://www.costar.com/ccrsi.

About CoStar Group, Inc.

CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of
information, analytic services and marketing. Founded in 1987, CoStar conducts
expansive, ongoing research to produce and maintain the largest and most
comprehensive database of commercial real estate information. Our suite of
online services enables clients to analyze, interpret and gain unmatched
insight on commercial property values, market conditions and current
availabilities. Through LoopNet, the Company operates the most heavily
trafficked commercial real estate marketplace online with more than 5.8
million registered members and 3.6 million unique monthly visitors.
Headquartered in Washington, DC, CoStar maintains offices throughout the U.S.
and in Europe with a staff of approximately 1,500 worldwide, including the
industry's largest professional research organization. For more information,
visit http://www.costar.com.

This news release includes "forward-looking statements" including, without
limitation, statements regarding CoStar's expectations, beliefs, intentions or
strategies regarding the future. These statements are based upon current
beliefs and are subject to many risks and uncertainties that could cause
actual results to differ materially from these statements. The following
factors, among others, could cause or contribute to such differences: the risk
that the trends represented or implied by the indices will not continue or
produce the results suggested by such trends; the possibility that momentum is
not or will not shift to the broader market dominated by smaller,
less-expensive properties; the possibility that buyers will not continue to
drive up pricing at the low end of the market; the risk that liquidity
measures will not continue to improve; the possibility that the level of
distress property sales does not continue to decline; and the risk that
investor demand and commercial real estate pricing levels will not continue at
the levels or with the trends indicated in this release. More information
about potential factors that could cause actual results to differ materially
from those discussed in the forward-looking statements include, but are not
limited to, those stated in CoStar's filings from time to time with the
Securities and Exchange Commission, including CoStar's Annual Report on Form
10-K for the year ended December 31, 2011, and CoStar's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2012, including in the "Risk
Factors" section of each of these filings. All forward-looking statements are
based on information available to CoStar on the date hereof, and CoStar
assumes no obligation to update such statements, whether as a result of new
information, future events or otherwise.

CONTACT: Richard Simonelli
         (202) 346-6394
         rsimonelli@costar.com