US commercial real estate value falls 2.5 Percent in 3rd Quarter 2007
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For the first time in 5 years commercial real estate has lost value. The 3rd quarter showed a 2.5 percent decline in the value of commercial real estate owned by large pension funds.
Of course, the run up has also been amazing and a pull back has been expected. In the past 5 years commercial real estate values have doubled. One could not reasonably expect that the prices would increase much more, but now we have to see in the face of tighter credit how the commercial real estate market holds up in the near term.
The drop may not only spell the end of a five-year rally during which commercial real estate prices effectively doubled, but it also may signal that weakness in the housing market is spilling over into commercial real estate, said the MIT Center, which added that the last time that prices fell more than 2.5 percent was in the fourth quarter of 2001, when prices fell 3.9 percent following the terrorist attacks of 9/11.
Commenting on the index for the third quarter of 2007, MIT center director David Geltner said in a statement, “The fall in our index is the first solid, quantitative evidence that the subprime mortgage debacle, which hit the broader capital markets in August, may be spreading to the commercial property markets.” The Boston Globe.
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Great blog, keep the great content coming! 
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Comment by Michael on 16 November 2007:
The real estate market is sick; property has become over-valued. People will not (and cannot) pay the exorbitant prices that have resulted from bad practices. So how do we find the true value? An open auction ala ebay will find the true market value.
http://www.bidhive.com
Bidhive.com seeks to do just that with its new online bidding paradigm. Real estate professionals can post properties that will be marketed across dozens of popular sites at no cost, and consumers and investors can bid on these properties quickly and easily. Bidhive.com: The Solution
Comment by Hugh on 20 November 2007:
I believe that the commercial market will experience slow down in 2008. Today the cap rates are low and properties are lingering on the market.
There is one place that properties are getting major exposure and that is http://www.ourcommercialspace.com
Current users think that it is the answer to making deals happen. Check it out.