Prices for office buildings and shopping centers rose throughout 1997, while prices for apartments were essentially flat, according to Property Information Exchange, New York, a database that tracks transactions on more than $3 billion of commercial real estate.
Asking prices for office buildings peaked at an average of $88.45 per square foot at the end of the fourth quarter and finished the year at $86.05 per square foot nationally, compared with $82.96 at the end of 1996, according to PIX data.
Retail properties increased to an average of $117.47 per square foot at the end of the year, up from $109.28 a year earlier. Apartments ended the year at an average of $57.54 per square foot, compared with $57.84 for the same period in 1996.
"Investment activity continued to be strong in most markets with properties selling at or above replacement cost in hot markets," said Phil Wharton, PIX chief executive. "This heated bidding activity tended to drive down cap rates (yields) for the most sought-after properties, causing investors to look for values in secondary markets and in lower quality properties."
Speculative development has returned, but this time it is public real estate investment trusts rather than private developers, said Mr. Wharton.
