US commercial real estate value falls
The value of US commercial real estate owned by big pension funds fell 2.5 percent in the third quarter, the first quarterly downturn since the third quarter of 2003, according to an index produced by the MIT Center for Real Estate.
The drop may not only spell the end of a five-year rally during which commercial real estate prices effectively doubled, but it also may signal that weakness in the housing market is spilling over into commercial real estate, said the MIT Center, which added that the last time that prices fell more than 2.5 percent was in the fourth quarter of 2001, when prices fell 3.9 percent following the terrorist attacks of 9/11.
Commenting on the index for the third quarter of 2007, MIT center director David Geltner said in a statement, "The fall in our index is the first solid, quantitative evidence that the subprime mortgage debacle, which hit the broader capital markets in August, may be spreading to the commercial property markets."
(By Chris Reidy, Globe staff)