The chart above includes the latest (as of November) Co-Star data. Note that both measures of commercial real estate prices are at new nominal highs and have been increasing at annual rates of 8-10% for a number of years.
Moodys publishes a similar index (second chart above). As both charts show, prices have reached new all-time highs.
As the chart above shows, commercial real estate has been outperforming the residential market in the current cycle, whereas it lagged during the great housing market boom of the early 2000s. But both are performing quite well.
If anything, the action in the commercial real estate market would appear to be at odds with the very low rates of inflation and sub-par rates of growth that we have seen in the current business cycle expansion. My take is that this is evidence, at least in the past year or so, of rising optimism as well as declining demand for money, and both are precursors, in this age of Quantitative Easing, of rising inflation, as I've explained many times before. However, the bond market is still showing modest inflation expectations (e.g., 1.9-2.0%) for the foreseeable future, so it may be premature to sound a rising inflation call. Especially given the impressive strength of the dollar.
As a reminder, real estate is likely to benefit from a strong economy as well as rising inflation.