Commercial real estate an opportunity?

According to the CCIM Institute and the Real Estate Research Corporation (RERC), commercial real estate is positioning itself to be an attractive investment on a risk-adjusted basis in 2010 and 2011. Property prices in the retail and apartment sectors showed moderate increases in the fourth quarter of 2009, breaking the string of significant price declines during the previous 12 months. In addition, CCIM and RERC said weighted average capitalization rates for the office, industrial, retail, and apartment sectors increased by 20 to 30 basis points in the fourth quarter.

The RERC/CCIM Investment Trends Quarterly Report showed that 12-month trailing transaction volume increased slightly in the apartment and retail sectors, hinting that volume may be starting to bottom out for these property types. While transaction volume for the office and industrial sectors continued to decline in the fourth quarter, it did so at a much slower rate than in the previous three quarters, the groups said. “The latter part of 2008 and all of 2009 were definitely the shock years, and we’re looking to 2010 as the recovery year,” said Richard Juge, the 2010 president of the CCIM Institute. “We will see more activity, perhaps not in gross dollar levels, but in the volume of deals that close in 2010. This is the time to buy.”