A number of indices that will allow commercial real estate to be traded synthetically have been launched over the past few months. A partnership between Real Capital Analytics, Delta Rangers and Corridor Capital is working to create a business that will use a transaction-based index to match buyers and sellers for synthetic trades. At the same time, Radar Logic is close to launching a real estate index that it says will provide a price per square foot data on a daily basis for 25 metropolitan statistical areas in the continental U.S.
RCA is providing a database of property transactions for indices that have been developed by Jeff Fisher and the MIT Center for Real Estate. The 29 indices will include national, regional and metropolitan market returns by sector, said Neal Elkin, principal.
Elkin will be moving from RCA to head Real Brokerage, a newly formed company that will match buyers and sellers on synthetic real estate transactions. Over the long term, RCA plans to expand its index business to Europe and Asia, Elkin said.
Radar Logic wants to create a statistically valid measure of the average price per square foot in a given geographical market price, which will allow real estate to be treated like a commodity, said Michael Felder, principal. The company hopes that market participants will use the index to develop derivatives.
