True Values

Hessam Nadji, managing director of research services for Marcus & Millichap Real Estate Investment Services, points out that looking at retail REIT valuations provides a fairly good proxy for where property valuations currently sit. Immediately following the breaking of the credit crunch in September REIT valuations plummeted by about 30 percent as many investors bought into the idea that commercial real estate would follow subprime mortgages down the tubes. However in recent months REITs have regained 50 percent to 60 percent of those losses. As a result, REITs sit about 10 percent to 15 percent off their peak, which dovetails with how far retail property valuations have dropped.