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BURBS GO BEGGING At year-end 2012, the average price of income-producing real estate in the United States was 20% below the November 2007 peak, according to Moody's/RCA Commercial Property Price indices. It was, however--let the inflationary glass be half full--33% higher than the January 2010 trough. Following is a survey of value, non-value and leverage. Because "commercial real estate," like "houses" or "bonds," is a cosmic-size class of asset, it helps to narrow the focus. What, then, about "office buildings," specifically the skyscraping towers in central business districts? They were up 19.1% in price last year, the standout subindex among the Moody's/RCA indices. Suburban office buildings? The Eeyore of the commercial property market was the only segment to register a price decline in 2012, off by 0.8%. The widening gap between downtown office towers--especially the towers in the sparkly coastal cities--and the stubby structures that dot suburbia is, to a degree, old news. In the recovery that follows the bust, "core" has always rallied first, this publication quoted the former chief of CBRE Group, Brett White, as saying two years ago (Grant's, March 25, 2011). "Unusual today," we added, also on White's authority, "is the gulf between the vanguard and the rearguard." Well, the gap has only widened. The meager and grudging economic recovery is one reason why. The predilections of major institutional investors, recently including sovereign wealth funds, are another. As foreign tourists prefer New York City to Stamford, Conn., so do the likes of the Norwegian Government Pension ...

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