The third quarter of the year saw investment-grade commercial real estate prices gain 4.4%, the biggest gain since mid-2007, indicating a change in the market.

According to David Geltner, Director of Research, MIT Centre for Real Estate, while one quarter does not make a trend, ‘this is the strongest sign of a bottom that we’ve had in two years’. Up 39% from mid-2007’s high-water mark, the TBI reached 36.5% below its 2007 peak, last quarter.

Transaction volumes increased quarter-over-quarter, from 42-transactions in the 2nd quarter of 2009, to 90 in the 3rd quarter. An increase in the price index this quarter also saw a substantial increase in transaction volumes second quarter in a row, indicating the first market change in two years.

For the past two years, the commercial real estate market has been pretty brutal, and when loans come due, some borrowers face financial shortfalls, while others worry as they fight to meet their monthly payments. Last month, delinquency rates for commercial mortgage-backed securities hit 4.8%, up from September’s 4.36%, while far above October 2008’s level of 0.77%.

Renters are responsible for the non-performance, as they are not generating enough money for covering their monthly payments, in this current climate of slow business. This means rent collected by landlords is insufficient to pay for their mortgages.

However, along with the improvement in price, a survey for investors indicates they would be prepared to pay an extra 12% for properties, after 8-quarters when buyers were prepared to pay far below the asking price, which has given a boost to the commercial market.