Commercial Real Estate Off 2007 Pace But Commercial Mortgages Still Strong

Commercial real estate investment in fell sharply in the first six months of 2008 but the commercial mortgages sector will with stand this little storm nicely.

CB Richard Ellis Ltd. (CBRE) released a report this week outlining the seemingly gloomy numbers in the
commercial mortgages and real estate markets. So far this year there has been a
24% drop in investment in office buildings, malls and industrial properties.
But there is a silver lining behind these clouds.

On the surface, a drop of that level appears to echo the other negative economic news Canadians have faced recently. If we look a little more closely though, as CBRE has done, we can see that the news isn’t all bad. The 24% drop is a comparison to 2007, which was a record year. CBRE predicts overall investment in the commercial real estate market to reach about $20 billion in 2008, significantly less than the $32 billion of last year, but not at all out of line with 2005 and 2006 figures.

The bottom line? The 2007 boom was a blip and lower 2008 figures for commercial mortgages and real estate investment are no cause for alarm.