London Analyst Says There's a CRE Bubble

While it's generally accepted that residential real estate experienced a massive bubble, few have argued that commercial real estate's seven-year bull run had lost touch with reality. But now a London analyst--based on looking at commercial real estate derivatives is saying just that.

``Commercial real estate is a full-blown bubble that feels very much at a bursting point,'' said Christian Stracke, an analyst in London at CreditSights Inc., a fixed-income research firm. ``There's a fairly toxic mix of factors at work.''

There's been a lot of stories about various commercial real estate indices of late. S&P updated its indices through August this week, which showed values still rising. The Moody's/MIT index, meanwhile, showed a decline. And deal volume has dropped off significantly.

(Spotted at Mish's Global Economic Trend Analysis.)