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ATLANTA-While some in the commercial real estate are bemoaning the grim housing statistics of recent months, others are trumpeting the strength of other property types, such as the office and industrial sectors.

Just ask those who oversee the Wells S&P REIT Index Fund. The fund hit an all-time high last week, at the same time housing sales figures continued to be sluggish. The fund, the first mutual fund licensed with Standard & Poor’s that seeks to mirror the holdings of the S&P REIT Composite Index, hit a net asset value of 13.64 on Aug. 22.

The fund’s record-setting pace reflects the strength of REITs, but also the strength of the commercial real estate market, particularly office and industrial markets. While some of the fund’s holdings are in the residential sector, such as Equity Residential Properties Trust and AvalonBay Communities, Inc., the fund also has holdings in companies such as Simon Property Group, Inc., Vornado Realty Trust and Kimco Realty Corp.

Don Henry, managing director of asset management, Wells Real Estate Funds, tells GlobeSt.com that there is little correlation between the economic factors that drive the housing sector and the factors that drive the office and industrial sectors. While consumer spending and interest rates have been behind the success of the housing market in recent years, the office and industrial markets have been strong in recent months due to job creation and formation.

“If you look at the coastal markets, those are the markets that are thriving right now,” Henry says. “Demand is strong. At the same time, new construction has been constrained.”

Henry predicts that the strength will continue through the rest of the year and into next, providing the economy stays strong. Among factors contributing to the success is the contained constraint of new supply, due in part to escalating construction costs. “To sustain a strong office market, we’ll have to maintain a strong economy,” he says.

Henry adds that, although the housing sector is soft right now, he does not expect the conditions to last. “It’s more likely to be a cyclical change rather than a long-term trend,” he says.

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