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By now, the troubles in the residential real estate market are well-known. But the other half of the real estate market - commercial real estate - has been surprisingly resilient. Two measures of the commercial real estate market released data last week, and while it's not all champagne and roses, it is certainly a brighter picture than conventional housing ... for now.

Data from Standard & Poor's S&P/GRA Commercial Real Estate Indexes show that office property prices rose 2.3% in August and 13.1% for the one-year period ended August 31, making it the best performing sector of the market.

Although it was up 1.2% for August and 2.2% for July, the Apartment sector was the worst-performing sector for the 12-month period and was down 1.3%, reflecting its tie back to the residential housing market. Warehouses and Retail both gained more than 10% on the year. The worst-performing sector for the month of August was the Retail sector, which was the only one with a negative return; it was down 0.7%.

Among the regions - Desert Mountain West, Mid Atlantic South, Midwest, Northeast and Pacific West - the Desert Mountain West showed the least impressive performance for August, down 1.8%. However, all five regions posted positive performance on the year.

The National Composite index was up 1.1% for the month and 6.2% for the 12-month period. It's one-year performance has declined over the past two months from 6.6% in June. David Blitzer, Managing Director and Chairman of the Index Committee at S&P, noted that that commercial property price indexes were continuing their deceleration from an August 2006 peak.

The Moody's/REAL Commercial Property Price Indices cover quarterly results through the end of September, and suggest that the tide may have turned in the commercial real estate market as well. The national index covering all property types is released monthly and was down 1.2% for the month of September. Moody's warns in its November report that the data could represent an inflection point in commercial real estate values brought on by the current liquidity crunch.

In the third quarter, Apartments was the worst-performing of the four property types at the national level, down 1.0% from the prior quarter, followed by Offices, which were down 0.5%. Industrial properties, however, were up 3.0% from the prior quarter, while Retail properties were up 2.6%.

Source: Commercial Real Estate Faring Much Better Than Its Residential Sibling