Capital flows are generally continuing to improve liquidity within the recovering domestic commercial real estate sector. But illustrating the erratic recovery, suppliers of both equity and debt are favoring top-tier office towers and multifamily properties in leading markets — creating notable differentials in capitalization rates and mortgage rates and terms between those categories and locales and, well, pretty much everything else.

Looking at the minuscule 4 percent (or lower) capitalization rates seen with trades of top-tier trophy office and apartment properties of late, one might get the impression real estate capital markets are flowing like it’s 2006 or 2007 all over again.

They’re not — not by a long shot.

But it is clear that income-property equity (especially) and debt investment activity today is generally a heck of a lot more liquid than it was in the dark days of 2009 — and even the latter half of 2010 for that matter.

Ho