The Two Sides of Commercial Real Estate

Following the plunge in property values and a near freeze in commercial real estate deals during the recession, there are signs of improvement.

The outlook for commercial real estate is still ugly, though less so than a year ago. After a 40% decline in average property values since August 2007 and a nearly 80% drop in sales volume during the recession, more deals are finally getting done. Buyers and sellers are moving closer on pricing. And a small amount of mortgage-backed debt is again being securitized and sold, providing a trickle of new financing now and the hope of a steadier stream in the future.

In fact, the market has a bit of a Jekyll & Hyde flavor, with some segments attracting considerable attention while most property, in most places, is still being shunned. As Mitch Roschelle, a partner in the U.S. real estate advisory practice for PricewaterhouseCoopers, puts it: Investors' flight to quality has “created a greater separation between the trophy and the trash assets.”

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Jerome Idaszak
Contributing Editor, The Kiplinger Letter
Idaszak, now retired, worked on The Kiplinger Letter as its economics writer for 21 years. Before joining Kiplinger in 1992, he worked for 15 years with the Chicago Sun-Times, including five years as a columnist and economic correspondent in the Washington, D.C., bureau, covering five international economic summit meetings. He holds bachelor's and master's degrees in journalism from Northwestern University.