Investors sold on commercial real estate

Demand for office space high, retail sector worrisome

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Respectable job growth, improving fundamentals, favorable interest rates and limited speculative construction suggest strong investor appetite will continue in 2007, according to a commercial market update and forecast presented Thursday at the National Association of Realtors Midyear Legislative Meetings & Trade Expo in Washington, D.C. According to NAR, investment in commercial real estate rose 11 percent in 2006 to a record $306.8 billion in investment-grade transactions, with office buildings leading the way. Institutional investors continue to pour funds into commercial real estate, commercial lending volume is up and delinquencies remain relatively low. Lawrence Yun, NAR senior economist, said fundamentals have firmed in most sectors. "Over the past year, 2 million jobs have been created, and unemployment has been hovering at or below the 'natural rate' of about 5 percent, supporting the office sector in particular," he said. "The office market is the sector of...