Each quarter, Dr Glenn Mueller at Dividend Capital updates his outstanding report on commercial real estate market cycles. He segments his reports to five separate commercial property types in more than 50 Metropolitan Statistical Areas (MSAs).
Property types include:
His cycles are defined as:
Click here to access this report.
Good news is that rental rates for all but one of the five segments increased over the past year, with retail being the only laggard. Posting another increase was multifamily, showing a 3.5 percent gain. The greatest increase was in hotels—with RevPAR up more than 8 percent. Hotel revenues are expressed as RevPAR which is defined as the Revenue Per Available Room and is calculated by multiplying the average daily room rate times the occupancy rate.
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Bottom line is that commercial real estate (except perhaps retail) continues to post gains or hold its own — despite abysmal job growth.
I still conclude that it is time to overweight in real estate given investment alternatives.