Two Ways: Kicking Commercial Real Estate While It's Down

By Terry Woo  MAY 27, 2009 5:10 PM

Strengthen your portfolio in good times and bad.


Commercial real estate prices in the US plunged by 10.5% in the first quarter and by 12.2% in 2008. So says global real estate data firm IPD.

According to Reuters, for all of 2008, monthly income rose 5.4% in the US. But the overall total return for US commercial real estate dropped 7.4%, IPD said in a report released today.

During the first quarter of 2009, monthly income increased 1.4%, while the total return on US commercial real estate dipped 9.2%.

Breaking down the numbers, office property led to the downside with a total return of -8.2%. For 2008, it dropped by 12.8%. This was followed by apartment values, which plunged 12.2% last year; then by industrial property and retail real estate, which slumped 11.7% and 11.4%, respectively.

Revisit Professor James Anderson’s Why Commercial Real Estate Can’t Be Saved.

From the Bull Pen: Bulls can look elsewhere, such as to the coal sector. Massey Energy (MEE) displayed impressive relative strength today in a down tape. A sell stop can be set below $20.

From the Bear Cave: In commercial real estate, bears can consider Vornado Realty Trust (VNO). See the pattern of lower highs developing. Follow-through on the downside would be especially encouraging for bears but note that the stock could see a short bounce off of its 50-day moving average ($43).

The only question: How long would that bounce last, even if it were to occur?

Hope it was a great one, Minyans. Good night!

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No positions in stocks mentioned.

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