Friday, April 22, 2011

What is happening to commercial real estate markets?

Where is the commercial real estate market headed?

According to Moody’s Investors Service, commercial real estate property prices fell the past 3 months and the market is “dangerously close to double dip territory." The service’s REAL Commercial Property Price Index (CPPI) showed prices near the market’s “post-peak low” set in August of 2010.

Yet two days ago, USA Today reported "The once-dismal commercial real estate market is turning around far more quickly than analysts expected, with troubled loans falling, occupancy rising and office building sales surging in the largest markets."
Commercial real estate's improving health exceeds forecasts

Prices are falling, but foreclosures are down and occupancies up?  True, some of this inconsistency can be explained by the old adage "all real estate is local."  One really must examine the particular market.  But is something else happening in the aggregate that is apparently creating this strange dynamic?

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