It's not the fall that kills you...it's the sudden deceleration trauma.

I'm thankful for the formation of a potential bottom in CRE. Ya it's a bit of a hard landing but hey any bit of good news with respect to commercial property valuations is cause for some celebration.

This from MIT’s CRE Group:
"Results for the 3rd quarter of 2009 show a 4.4% increase in prices compared to the previous quarter for properties sold from the NCREIF database, placing the price index 36.5% below its 2007Q2 peak. The demand-side index rose by 11.8% (second highest in index history), to 41.9% below its 2007Q2 peak. The supply-side of the market recorded a continued modest drop of of -2.5%, taking that index to 31.8% below its 1Q08 peak. Transaction observations underlying the TBI increased for the second quarter in a row, from 0.6% to 1.0% of the NCREIF population of properties." GET TBI CHART HERE.

We’re starting to see some deceleration in the freefall in CRE property prices. As the market girds for massive extended financing and re-financing this deceleration provides some relief that a bottom may be forming and the functions of price, time, and capacity to for absorption will determine the future trajectory of valuations. Massive fire sales are not good for any industry and propping up bad investment decisions via government support just robs from the future. For those investments that were good business propositions and performing somewhat, they will see some expected relief from 2010 as evidenced by the next post: FDIC POLICY TO SAVE THE BABY