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- May 2010: Vol. 22 No. 5

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Don’t Believe the Golux: Real Estate Will Rebound, But It Hasn

by Geoffrey Dohrmann

There are a lot of folks out there banking on the premise that the markets have bottomed and commercial real estate pricing is on the rebound. In some ways, it certainly looks that way. Several recent transactions have rocked what was, up until recently, a very stagnant market. In each case, a well-located, well-leased class A property drew multiple bids totaling 25 or more, driving pricing up and cap rates down to less than 7 percent, 6 percent and even less than 5 percent.

From this evidence, some have concluded there is too much money in the markets waiting to pounce on the relatively few quality transactions that are coming to market, and therefore, pricing for these kinds of transactions will continue to remain strong.

For my money, this is wishful thinking that rests on the fact that most of the folks looking at — and even bidding on — these transactions have a vested interest in pricing continuing to hold up for these kinds of assets. After all

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