Unlike residential real estate, which anyone with a pulse would agree took a rather desperate tumble over the last several years, the existence of a commercial real estate crash continues to be a subject of debate. Put a panel of "experts" up in the Brady Bunch boxes, and there will be a few who will argue that commercial real estate is on the upswing, and, in fact, a great investment.

I found myself walking the lines of those very boxes today, as I read two different reports: One, from Moody's, decried a 4.1 percent increase in commercial real estate prices in December of 2009. "This marks two consecutive months of price gains, and is the largest monthly increase in the history of the Commercial Property Price Indices (CPPI). Of course it notes that prices are still down 29.2 percent year over year and 40 percent from the peak. But there was also a significant spike in transaction volume in December, and, in the top ten cities, the office sector saw the most significant increase.

Good news right?

The all-important, jobs-reliant office sector seeing a rebound! And overall, the numbers are "offering a tantalizing hint that markets may be approaching bottom," say the Moody's experts.

But wait, there's more. It's not all about prices, now is it? A few hours later I read a report from Credit Suisse claiming the number of distressed loans in commercial mortgage-backed securities may more than double to $60 billion by year end, causing problems for the overall economic recovery. Investors are still being tight with credit, and banks are reportedly being overwhelmed by the bad loans.

Apparently it's all enough to prompt Senate Banking Committee Chairman Chris Dodd (D-CT) to pen a letter to Federal banking regulators (Federal Reserve, FDIC, Office of Thrift Supervision, Comptroller of the Currency and National Credit Union Administration) , asking them to report on their efforts to "stabilize the very troubled commercial real estate market."

“I believe that the weakness in the CRE market requires prompt and robust responses from the regulators to guard against harmful effects on financial institutions and the economy,” Dodd said. “I urge you to redouble your efforts to provide appropriate oversight of this vital component of our economy, and look forward to working with you to bring much needed stability to the CRE market.”

So is commercial real estate in trouble or isn't it? If it's in trouble, why are prices going up? I asked my guru, Dr. Sam Chandan, Global Chief Economist at Real Capital Analytics:

There is ample capital waiting on the sidelines of the commercial real estate market, waiting for opportunities to invest. This capital has grown increasingly frustrated over the last year, constrained by a bid-ask gap between buyers and sellers. Healthy bidding on available assets – even those coming to market in distress - may be exerting upward pressure on prices.

Questions?  Comments?