Bubble? What Bubble?

by Ryan Caione, July 26th, 2007, 6:21 am

There has been much wailing and gnashing of teeth over the much-publicized droop in the residential real estate market. Existing home sales are down. Unsold new homes sit empty. In 2006 builders of manufactured homes delivered their fewest shipments since the Kennedy administration. Subprime residential lenders are going down the tubes and taking the rest of the economy with them. The bubble has burst

With considerably less fanfare, commercial real estate remains a hot commodity. Earlier this year The Blackstone Group made what was briefly the largest private equity buyout ever when it plunked down almost $40 billion for Equity Office Properties Trust, which once owned the most real estate in the US behind the government and God. And Blackstone had to fend off Vornado Real Estate Trust to do so. Since the deal closed, the company has found no shortage of takers as it divvies up some of Equity Office’s former properties. On top of that, Blackstone announced a $26 billion deal to buy Hilton Hotels earlier this month.

Your house may still be on the market, but investors and speculators continue to trade office space, hotels, and even humble community centers (strip malls to you and me) like scrip.