Are we in the midst of a commercial real estate bubble?
Data from commercial real estate data and marketplace company CoStar Group show commercial real estate prices are up 9.4%. That measurement comes from using the company's value-weighted index of commercial real estate transactions nationwide. The index also shows commercial properties up as much as 41% on average from their 2010 lows.
To get a perspective on what's next for commercial real estate, we talk numbers with R. Donahue Peebles, Chairman and CEO of The Peebles Corporation. The company has a multi-billion dollar real estate development portfolio.
Peebles believes the market isn't in a bubble. Instead, he sees it as trying to return to its pre-financial crisis levels. What's driving prices up is the lack of supply, according to Peebles.
"What we have here is a supply-constrained market," says Peebles. "From 2008 going forward to 2012, there was essentially no new construction in the gateway markets around the country and especially secondary markets. So, now what's happened is that we've got supply constraint. That supply constraint is what's pushing prices up."
He also makes this prediction: "Real estate will outpace inflation significantly over a 10-year period of time or any long-term hold."
Peebles says there are three markets that are seeing commercial real estate prices move higher but they are not in a bubble. And, there's one market in particular he thinks has much more room on the upside. "What you're seeing is tremendous demand because there's no new inventory of any consequence."
Watch the video above to see Peebles' interview with Talking Numbers and to hear what three commercial real estate markets he believes are growing but not in a bubble.
-----
Follow us on Twitter: @CNBCNumbers
Like us on Facebook: facebook.com/CNBCNumbers
