Commercial real estate still booming

Steve Tripoli Jun 6, 2006

TEXT OF STORY

SCOTT JAGOW: While interest rates are taking a toll on the residential market, office real estate is still going gangbusters. Case in point: a deal yesterday between Brookfield Properties and Trizec. It creates one of the biggest landlords in North America. Steve Tripoli reports.

STEVE TRIPOLI: Trizec had just finished digesting a big real estate buy of its own. Now it’s being purchased, and at a premium to its share price.

SAM CHANDAN: It reflects the underlying fundamentals of the office sector which are very strong.

Economist Sam Chandan is with the independent research firm Reis Incorporated. He says commercial REIT buyouts roll on because investors are essentially betting strong rent flows will roll on.

That means they’re betting on a continued expansion gobbling up more office and warehouse space.

Widely-held REIT investments have been pretty hot for several years now. Chandan thinks that streak could continue even as job numbers and gas prices cause worries.

CHANDAN: I think there’s some uncertainty about the overall economy. I think that the commercial real estate sector, there is probably greater certainty there that the sector itself will continue to perform fairly well.

In other words, though the overall economy appears more dicey, it’s still a good time to be a landlord, or someone who invests in them.

I’m Steve Tripoli for Marketplace.

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