We produce specialized indices to track small cap CRE asset prices under $5 million in value for both the small commercial and multifamily markets.
The Boxwood Small Commercial Price Index (SCPI) is a broad measure of commercial property sales transactions across 128 metropolitan areas. We also produce a couple of SCPI benchmarks for smaller metro area aggregations. SCPI-6 tracks prices in the six largest metro areas by population, and SCPI-20 comprises the same 20 metros in the S&P/Case-Shiller Home Price Index with which we often draw comparisons.
Boxwood's Small Multifamily Price Index (SMPI) tracks sales prices of small multifamily properties in 48 primary and secondary metro areas.
Boxwood's commercial indices mirror the diversity of the small-cap CRE market by combining and tracking closed sales among various small commercial property types that range from conventional office, industrial and retail uses and also include secondary property types often associated with owner-users and single tenants such as free-standing buildings, street retail, mixed use, restaurant buildings, commercial condos and more.
Our inclusive definition of property types reflects the CRE mortgage portfolios of many commercial bank lenders. As a result, bank lenders and investors use the SCPI and SMPI measures to estimate changes in collateral values across metro areas, identify stronger versus weaker markets for investment as well as monitor changes in overall market conditions.
The historical time series begins July, 2006 and is updated monthly with a two-month lag. The SCPI measures, in particular, underscore the significant performance variation in pricing trends over time between small-cap CRE markets and the larger, investment-grade segment. (See our published article on this subject.)
Construction of the Boxwood indices borrow from conventional valuation techniques in which sales comparables are "adjusted" to reflect a subject property's attributes. We enhance this basic framework with robust multivariate hedonic models, employed metro by metro, to estimate the effects of location, vintage, property use, construction type and other factors upon sales prices. Once estimated, the effect of these factors on the sale price is removed to produce a population of transactions that is comparable across time within each metro area.
This technique leverages the information from tens of thousands of small-cap CRE property transactions to create a population of closed sales that is reflective of the broad small commercial and multifamily property sales market and is also comparable over time. Price movements are computed month by month, metro by metro, and smoothed into over-time trends. The metro trends are then aggregated in the form of national indices.
In essence, Boxwood's index methodology statistically replicates the qualities of a repeat-sales index without the limitations imposed by small sample sizes.
The indices are updated monthly and are available with historical trends via annual subscription. Our subscription fee is listed here.
Click here for further information about our SCPI market data.
For a narrative discussion of the latest trends in property prices and sales volume, read our Small Balance Advocate report here.