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London Analyst Says There's a CRE Bubble

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While it's generally accepted that residential real estate experienced a massive bubble, few have argued that commercial real estate's seven-year bull run had lost touch with reality. But now a London analyst--based on looking at commercial real estate derivatives is saying just that.

``Commercial real estate is a full-blown bubble that feels very much at a bursting point,'' said Christian Stracke, an analyst in London at CreditSights Inc., a fixed-income research firm. ``There's a fairly toxic mix of factors at work.''

There's been a lot of stories about various commercial real estate indices of late. S&P updated its indices through August this week, which showed values still rising. The Moody's/MIT index, meanwhile, showed a decline. And deal volume has dropped off significantly.

(Spotted at Mish's Global Economic Trend Analysis.)

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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