Data from repeat sales of commercial real estate assets tell a “tale of two worlds,” with larger U.S. metro markets attracting the majority of capital, according to CoStar Group Inc.

CoStar recently launched the CoStar Commercial Repeat Sales Index (CCRSI), a new measure focused on analyzing repeat sales “regression” - whether or not properties prices are raising or falling based how often properties are sold between upgrades. CoStar’s initial report on the index, which examined results through the end of June 2010, found the CCRSI for all property types down 7.78 percent from the previous month. Nationally, all the four major real estate sectors included in the index – multifamily, industrial, office and real – were down from May.

According to CoStar, in the past two decades, examining repeat sales regression has become a widely accepted measurement for understanding price movement. CoStar’s repeat-sale analysis only considers commercial real estate properties that have sold more than once without significant changes to their characteristics.

In an interview with REIT.com, Norm Miller, vice president of analytics for CoStar, said that one of the reasons it has taken so long for someone to create an index broad enough to examine sales regression is because it takes five times more data than most normal indexes to generate a comprehensive report. Miller credited CoStar’s recent acquisition of Property and Portfolio Research, Inc. (PPR) as the move that provided the “quantitative horsepower” to create the CCRSI.

“Our indices are broader and thus more realistic for the average owner or those institutional buyers willing to dip into secondary markets,” Miller said.

Miller commented that the multifamily sector is in more distress than any other at the moment, even though many “Class-A” properties in the larger markets are turning positive in terms of both profitability and occupancy rates. The CCRSI showed the multifamily sectors of the Northeast and Southern regions positing small gains, while the Midwest and West saw losses of 10.3 percent and 8.9 percent respectively. Miller noted that the multifamily sectors in several of the larger soft markets across the country, such Phoenix and Las Vegas, didn't show signs of improvement in occupancy levels in the first half of the year.

When it comes to properties trying to maintain current tenants and attract new ones, Miller warned that while Class-A properties are filling up, it will take some time for second- and third-tier properties to follow suit. That makes now a good time for owners of these properties to focus on improving their offerings in order to bolster their occupancy levels, he said.

“In many markets where we are now see vacancies bottoming out and absorption going positive, it is a good time to maintain and upgrade, especially in the office market for sustainable features, as we see premiums for such properties in terms of rents, as well as lower operating expenses for electric and water,” Miller said.

Miller suggested that lower-tier properties could see their values increase in line with a general economic recovery.

“When the economy rebounds, we will see more start-ups again, and many of them want cheap space, which will help the Class-B and C properties,” Miller said. “This will take some time, but the mortgage rates are such a bargain that it makes sense to look for deals now.”