Is the worst over for commercial real estate?

February 04, 2011 12:36PM

The U.S. commercial property market is on the upswing after a predicted collapse that never quite happened. According to Bloomberg News, commercial properties sold by institutional investors last year rose in price by 19 percent, which, according to the MIT Center for Real Estate, is the second-largest price gain ever for those types of sales. Meanwhile, Real Capital Analytics recorded investments in office properties last year at $41.6 billion, more than double what was invested in that sector in 2009, and the commercial mortgage-backed securities market is also beginning to rebound. Jones Lang LaSalle predicted that commercial real estate deals overall may rise 40 percent in 2011, to a volume of $135 billion. Buoyed by a rise in commercial property prices, lenders have finally begun to unload distressed assets from their balance sheets. “Give a little credit to the strategy put forward by the government: keeping interest rates low and giving lenders some flexibility to hold these troubled assets on their books for a while,” Dan Fasulo, RCA’s managing director, said. “Now that values are on the upswing, it’s given owners and lenders more wiggle room to work out these troubled situations.” [Bloomberg]