SOURCE: Investment News
Investment News writer Robert Brunswick writes of the changes and evolution of commercial real estate and how it was emerged as an asset class. During the 1980’s the commercial real estate market suffered from overbuilding and tax problems. Many factors have helped the commercial real estate market increase in size and continued growth fuels it today.
Positive factors introduced in the market include:
- Real-time property information
- Transparent reporting
- Growth in the capital markets
- Specialized academic programs
The issuance of commercial backed securities in the commercial real estate market has increased to $205 billion in 2006. That’s up from $169 in 2005. That’s an increase of 21% in just one year. Also showing an increase is the demand from investors and pension funds to invest in the commercial real estate market. Some figures say as much as 10% of pension fund assets are being invested in commercial real estate which shows a moderate, yet positive increase of 5% over previous years. More are turning to commercial real estate for it’s larger returns and lower volatility.
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