We've talked a lot about the residential real estate bubble, but the following news article is the first I came across where I see "commercial" and "real estate bubble" seriously mentioned together.

First, here is a summary news item of the recent article by REALTOR Magazine:

"A bubble is forming in the country's commercial real estate market as prices rise to increasingly lofty levels, says Washington Post columnist Steven Pearlstein..."

Click here for rest of summary

Here's the original Washington Post article: "An Economic Pillar On The Verge Of Collapse"

It appears that just as the residential market has had to correct itself and move from investment decisions driven almost soley on appreciation profits, the commercial market needs a similar correction.

A "correction" hopefully means that the commercial real estate market will "normalize" to where we are no longer depending on appreciation (subjective) -- to generate investment profits or allow over-leveraging (the real concern) -- but good 'ol financial fundamentals such as income streams and IRR (objective).

This is consistant with what some of the larger participants in the commercial investments market have already been saying.  For example, see my report on the TriState REALTORS® Commercial Alliance's Annual Commercial Real Estate Show (ACRES), where panel discussions members echoed this and stated that many commercial participants are already making the adjustment in their investment analysis and are essentially moving ahead.
 
 
How do you see it from your vantage point?


 
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