On the uptick: Commercial activity stronger than housing

Two recent reports highlight the strength of the commercial real estate market.

Morningstar reports that commercial real estate is much stronger than housing as evidenced by real estate funds, which have recorded an average annualized return of 33 percent over the past three years.

Through June, real estate funds have attracted $2.9 billion in new cash while investors have pulled out of nearly every other stock fund group. The decline in commercial real estate was not nearly as severe as the residential market crash due to the fact that office buildings, industrial facilities, hotels, and apartments were not overbuilt to the same extent as homes.

Meanwhile, Fitch Ratings reports that delinquencies on commercial real estate collateralized debt obligations (CDO) declined in June for the second month in a row.