As commercial real estate price index jumps, sentiment still remains low

Nov.November 03, 2009 03:47 PM

Nationwide commercial property prices jumped by more than 4 percent in the third quarter, according to a real estate values index from the MIT Center for Real Estate. The figures marked the largest quarterly increase in more than two years, the center reported today, and the first jump in real estate prices in a year. Holly Horrigan, a research technician involved in the report, suggested that market conditions may have allowed commercial real estate to finally hit a bottom. “The combination of the upsurge in demand and the continued drop in sellers’ prices led to the strong increase in transaction volume and the beginnings of a reliquification of the market,” Horrigan said. Even so, David Geltner, the director of research at the center, was careful to temper enthusiasm for the report. “One quarter does not a trend make, and we are still well below normal trading volume,” Geltner said. His caution jives well with the sentiment reported in another commercial real estate report, this one also released today from the Real Estate Roundtable, which showed that many in the industry don’t expect commercial real estate to rebound in the near future. Industry confidence among property executives ranked a 56 on the index, Reuters reported, which is a far cry from a possible 100 rating — that would show executives think conditions are on the upswing. By many accounts, the MIT report would be considered wildly optimistic, as multiple experts have argued that the commercial sector may be the next to crumble. TRD

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