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SOURCE: Bloomberg

According to today's updated article on Bloomberg, there are growing concerns and predictions for a price drop in the commercial real estate markets in the coming months and years.

The article mentions some alarming numbers by industry consultants at New York-based Real Capital Analytics Inc. who recently reported that "Investors in July bought the fewest commercial properties since August 2006 and apartment building loans were down 50 percent from June."

Commercial mortgage rates have climbed as defaults rose in the subprime part of the residential real estate market. About six months ago, a 30-year commercial loan with 5 to 10 years of interest-only payments would have cost the borrower about 120 basis points more than the yield of the 10-year Treasury note. A similar loan would now cost about 160 to 200 basis points more than the 10-year Treasury's yield of 4.6 percent, data compiled by New York-based Cushman & Wakefield Sonnenblick Goldman show.

The increase has halted a rally that lifted prices for office buildings, apartments and hotels to records this year. The average price paid for high-quality office properties in city centers reached $291 a square foot, up from $188 in 2005 and almost double the average $152 in 2001, Real Capital reported.

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