A couple of days ago we asked whether the residential slowdown in real estate was also being felt in the commercial market. The Wall Street Journal has an article today saying that the markets are going in two different directions for 2006. An interesting read:

Real estate in 2005 was a tale of two markets: Residential sales showed early glimpses of a slowdown, while commercial sales roared ahead as buyers set records with the prices they paid — and the amount of money they borrowed.

The cool-down is expected to spread to all parts of the real-estate market in the coming year, although some acknowledge that such predictions haven’t come true in the past. “I wake up every year and say ‘it can’t be this good again,’ ” says Steve Kantor, global head of real estate for Credit Suisse First Boston. “I find it hard to believe the robustness of the markets.”

The residential real-estate market had reasons to wane after a five-year boom in sales volume and prices. Mortgage rates overall edged lower early in the year and then rose steadily. The average 30-year fixed-rate mortgage hit a low for the year of 5.53% in June, down from 5.77% in January, according to housing-finance concern Freddie Mac. But rates reached 5.91% by the end of September and by Dec. 29, had risen to 6.22%.

…

Investors still seem eager to buy any commercial real estate they can find. About $220 billion in U.S. commercial real estate changed hands in 2005, up from $186 billion in 2004, according to research firm Real Capital Analytics Inc. in New York. The bidders winning these deals often are private buyers who put out large sums for a property, contributing to a run-up in prices.

The average price for an apartment complex rose 15% to $102,745 a unit, from $89,213 in 2004. The average office building sold for $193 a square foot in 2005, up from $166 in 2004, according to Real Capital. In September, a group of Hong Kong investors, with Donald Trump as a minority stakeholder, used proceeds from the sale of an apartment complex on Manhattan’s Upper West Side to buy the Bank of America Center in San Francisco for $1.05 billion. The previous owner paid $879 million in 2004.RealEstateJournal .

Related posts:

1. Commercial Real Estate Down 15% in 2008, Returns To 2005 levels
2. It Isn’t Just Residential Real Estate Hurting, CB Richard Ellis Feeling the Pain
3. Commercial Real-Estate Sales Plummet in July, 2009
4. Commercial Real Estate Meltdown Keeps Federal Reserve From Raising Interest Rates
5. Trillion Dollars of Commercial Real Estate Loans Coming Due?