NEWPORT BEACH, CA—The Green Street Commercial Property PriceIndex increased by 2% in November. Reflecting values forinstitutional-quality properties owned by REITs inthe five major sectors, the index issued each month by locallybased Green Street Advisors has gone up 10% overthe past 12 months. Now standing at 115.4, it's slightly more than15% above the August 2007 peak.

In the most recent US Capital Trends Report, issued about twoweeks ago, Real Capital Analytics reported thatcap rates declined between five and 10 basispoints during the month of October across most property types. Inthe case of multifamily, for instance, RCA said they've declined tojust under 6%, with garden-style apartments showing the steepestcompression.

“Cap rates continue to move lower as investors search forreturn,” says Peter Rothemund, an analyst at GreenStreet Advisors. “And it would not be surprising to see furthermoves down. Against a backdrop of historically low government andcorporate bond yields, today's real estate valuations look ratherattractive.”