Is Commercial Property Still a Good Investment?

These are wonderful times for commercial real estate investors. Having fallen into a deep slouch with the ending of the Internet boom, the market has come surging back.

Over the past few months, a number of main institutional and private investors have been selling off large mass of their collection of prime commercial real estate. These investors, which include Calpers have been taking advantage of what they see as a frothy market. They are putting the sale proceeds into less pricey real estate or into other assets entirely.

To be sure, for every seller there is a buyer, and other investors have rushed forward to buy these properties, often at record prices. But as the consensus builds that the housing market has become seriously overvalued, some are asking whether the same might be true of commercial property. The answer matters not just to the individual and institutional investors who are committing ever-greater sums to real estate, but also to the growing number of companies who are using their valuable property to obtain cheap financing.