MIT index shows first drop in commercial property value since 2003

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clipped from web.mit.edu Indicates housing woes, credit crunch 'may be spreading' The value of U.S. commercial real estate owned by big pension funds fell 2.5 percent in the third quarter of 2007, according to an index produced by the MIT Center for Real Estate. The drop in the MIT quarterly transaction-based index (TBI) may not only spell the end of a five-year rally that saw commercial property prices effectively double, but it may also signal that weakness in the housing market is spilling over into commercial real estate. "The fall in our index is the first solid, quantitative evidence that the subprime mortgage debacle, which hit the broader capital markets in August, may be spreading to the commercial property markets," stated MIT Center for Real Estate Director David Geltner. The TBI is based on transaction price data from the National Council of Real Estate Investment Fiduciaries (NCREIF). the index of commercial real estate prices is updated quarterly and published on the Center's website, web.mit.edu/cre.