Question about Commercial vs Residential property price rises.
There has been a boom in residential property rent and sale prices in London and most of the UK recently.

Has this been equally reflected in the commercial property market?

If not, why not?
[{"id": "cml2hxm", "text": "From what I can tell it's a more specialist asset and pricing is too high for most small investors, so there is not the same momentum in commercial.", "replies": [], "depth": 1}, {"id": "cmlagaq", "text": "This [FT article](http://www.ft.com/cms/s/0/ba45b8f2-6b5d-11e4-9337-00144feabdc0.html#axzz3KxpxW9cW) and this [WSJ article ](http://online.wsj.com/articles/qatar-ups-offer-for-londons-canary-wharf-owner-songbird-1417711846) indicate that London is hot right at the moment. I don't follow international real estate though, so I can't comment with any good statistics about price appreciation.  \n\nCRE is much more about rent income and the amount of a purchase price that can be financed, so it doesn't quite follow the same supply/demand issues that happen with residential real estate. Except with the last boom, which saw reduced interest rates and lax lending policies lead to over-aggressive CRE lending, which fueled a boom in value. The same thing is happening to a limited extent right now, just not as much as in the 2005-2007 years. ", "replies": [], "depth": 1}, {"id": "cmls4c7", "text": "Every market is different. I have worked in CRE for the last decade in Los Angeles, a city a lot like London, with international tenants and very wealthy individuals. One thing that I have noticed in LA is that the CRE market has typically trailed the residential market by about 12-18 months. While that certainly isn't a universal truth, i think there is something to it. CRE prices are dependent on two factors - rents, and the return that investors are willing to accept to own CRE. When property values rise on residential property, I think the principals of the tenants (a large portion of which are small business) tend to get more bullish about investment in their business. They might hire more workers - and therefore lease more office space. Or take on greater inventories, which require more industrial space. The consumers, many of whom own appreciating homes, encouraged by their new equity in their homes, might be more inclined to buy goods, thus increasing retail sales, increasing demand for retail space. They take more vacations, leading to hire returns for hotels. Higher rents are based on leases, which typically run 3-10 years. So when residential values rise, tenants are more bullish when their next lease expires, which explains why there is a lag between residential and commercial. There are other factors - mostly interest rates - that impact cap rates and values. But i think if you checked this post in 18 months you'd find that commercial values in London see a similar increase that's occurred in the resi market. ", "replies": [], "depth": 1}]