Office Properties Sizzle as Home Sales Slacken

Office property rents jumped Q2 2007, even as the residential real estate market continues to show signs of weakness, according to data from Reis Inc. and ZipRealty Inc. Effective office property rents gained 3.1% in Q2 -- their sharpest increase in seven years -- following 2.8% and 2.1% gains in earlier periods according to the Reis report, to be released today. The office-vacancy rate of 12.7% is at its lowest level in six years, a sign the economy is producing more office jobs, says Reis's chief economist Sam Chandan. In particularly strong markets, rents are up 20% and more over the past year, as big-name companies like Blackstone and Morgan Stanley continue to build large stakes in the market. In contrast to the sizzling commercial market, home listings in 18 metropolitan areas were up 2.5% from May according to ZipRealty, suggesting continued weakness in housing sales and prices. Also this week, the NAR reported pending home sales declined 3.5% in May and has dropped 13% y/y.

Sources: Wall Street Journal I, II
Commentary: Investing in Commercial Real Estate • Housing ETFs: iShares Home Construction Down, Barclays' New REITS Offerings
Stocks/ETFs to watch: Blackstone Group LP (BX), Morgan Stanley (MS). Homebuilder ETFs: streetTRACKS SPDR Homebuilders ETF (XHB), iShares Dow Jones US Home Construction (ITB). Office REITs: HRPT Properties Trust (HRP), Liberty Property Trust (LRY), Mack-Cali Realty Corp. (CLI)

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Comments

[LeeCarlson:]

Same old news ,..just a different sector ! First it was the stock market boom, that finally fizzled out !
Then Real Estate, ( housing ) tht went thru the roof but fizzled out,...Now you want me to believe that
all these Office sales are the new boom ???
Give us a break,..I said it before and I'll say it again, Investors have a "herd" mentality. All
those commercial properties will be back on the market in a year at lower prices and sitting empty !!
Most investors are too lazy to do any homework,..they just follow the leader ! How many more of these cycles do we have to go thru before those Investors have spent it all ? LC

2007 Jul 05 03:56 PM