Commercial Real Estate posted solid gains in 2012 as recovery spreads to more markets.

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According to CoStar News, sales of commercial real estate in the United States reached $64 billion last year, which is the highest since 2004 and increased 22 percent from 2011.

The price gains spread beyond multifamily into industrial, office and retail.  Even commercial land showed signs of awakening mostly due to demand for multifamily with a 3.6 percent gain in the last quarter of 2012.

True, there was a big spike in December as sellers rushed to close deals due to the increase in capital gains tax rates for 2013.

Since the market fundamentals of larger class A properties in primary markets recovered first and competition has forced prices up and caps rates down, I expect more attention to move to secondary and tertiary in search of better returns.

Distressed sales were also down to 11.5 percent of total commercial real estate transactions, which is the lowest since late 2008, just as the crash was coming to commercial real estate.

There’s no question now that the recovery is broad based, but we will still have cycles like we have had through recorded history.  Given that primary markets and class A type properties recovered first, expect some softening as investors move investment dollars to class B properties in secondary markets.

http://www.costar.com/News/Article/CRE-Sales-Surge-In-2012-As-Pricing-Recovery-Spreads-To-More-Markets/145720