No different from other economic sectors, commercial real estate markets are cyclical — tracking the broader economy, albeit on a lag basis. Economic cycles affect the supply and demand for both the use of commercial real estate (the space market) and for investment in real estate (the asset or capital market).

A real estate cycle typically goes through four phases: recovery, growth (or expansion), decline and bottom. Since institutional investors first began investing in the 1970s, the U.S. property markets have gone through three “round trip” cycles, each starting a new recovery phase after the previous cycle has reached bottom. The “round trip” cycles are defined as follows:

•          Property market bust of 1990–1994

•          Dot-com bubble of 2000–2001

•          The Great Recession of 2008–2010

Property market bust of 1990–1994

The 1980s could be labeled the era of