NAR: CRE Investment Rose 11% in 2006

WASHINGTON, DC-The National Association of Realtors provides another proof point that the commercial real estate industry–in contrast to the residential sector–is still performing well. It reports that investment in commercial real estate rose 11% to a record $306.8 billion in investment-grade transactions in 2006, with office the top investment category. A record $71 billion worth of office properties traded hands in the first quarter, with strong activity in New York, Boston, Los Angeles and Chicago. Annual rent growth in the office sector is forecast at 3% to 3.5% in 2007.

Furthermore, decent employment growth, improving fundamentals, a favorable interest rate environment and limited speculative construction point to continued investment flows in this year as well.

This figures buttress findings released earlier this week by Stephen Fuller, director of the Center for Regional Analysis at George Mason University, for an analysis sponsored by the National Association of Industrial and Office Properties Research Foundation. It found that commercial real estate activity had the same impact on the economy as federal spending.