[IMGCAP(1)]

NEWPORT BEACH, CA-Not only have commercial property values fully recovered the ground that was lost during the last downturn, but they are now one percentage point above their 2007 highs, reports Green Street Advisors Inc., an independent research, trading and consulting firm concentrating on REITs, other publicly traded real estate securities and the private commercial real estate markets in North America and Europe.

As GlobeSt.com reported last month, Green Street's commercial property price index had indicated that property values had been completely regained and had increased by 2% in March. At that time, Peter Rothemund, an analyst at Green Street, had said in a prepared statement, “We've had modest economic growth, very low interest rates and minimal new building. And it looks like the upward momentum in values will continue. Real estate looks quite attractive relative to the yields that are available in the fixed-income market.”

Now, Rothemund says, “Very low interest rates, decent operating fundamentals and a vibrant financing market—it's not surprising that property values have been strong. And it's likely we'll see more gains. Real estate continues to be attractively priced relative to the returns on offer in the bond market.”

Sentiments about real estate yielding higher returns than the bond market are being echoed in the net lease sector as well. As GlobeSt.com recently reported, Paul McDowell, CEO of CapLease, says he's not sure he would qualify the net lease sector as being “too safe.” “It is a safe sector. The cash flows are long-term cash flows that produce good long-term income. Our dividend yield is 3.8% as of February. We have a premium yield only to the REIT universe, but when you look at the risk-free rate, you have to look at where the 10-year treasury is, and that's at about 1.92%. So here you have safe cash flows that produce what I think is quite a high yield.”

[IMGCAP(2)]

[IMGCAP(3)]