See below for Andy Little's recent commentary in the Richmond Times-Dispatch.

Like a song by The Raconteurs: “Steady, As She Goes” the Federal Reserve continues to issue statements that they will not alter short term rates until at least 2023.

Nonetheless, nervous investors are uncertain about inflation and the impact of trillions of dollars running through an economy that is in lift-off mode.

Perhaps the greatest evidence of inflation is in assets, such as the stock market, homes and commercial real estate.

Despite a significant drop in investment sales in the first quarter of 2021 when compared to the first quarter of 2020, pricing for certain commercial properties continue to set records.

The volume of commercial real estate sales was down 28% in the first three months of 2021 when compared to the same period a year ago, according to a recent release from Real Capital Analytics, a New York-based real estate research firm.

This past March, however, was a turning point as sales volume outpaced that of March 2020 by 11%.

Prices for industrial properties climbed 9.1% year-over-year in March, the fastest gain among the property sectors, while apartment prices rose 7.1%, according to the data.

Apartment projects continue to be buoyed by some of the lowest interest rates in history and demand for bonds backed by apartment loans is at an all time high.

Pricing for the most recent Freddie Mac bond offering reached an all-time low in late April as investors continue to show confidence in multifamily, according to Commercial Mortgage Alert, but bonds backed by office properties are getting more scrutiny.

The San Francisco office market has struggled and news in February from cloud services provider Dropbox doesn’t help matters. The company, which announced last fall it would allow employees to permanently work from home, said in February that it would try to sublease the unneeded office space.

The combination of the subleasing the space and the gloomy San Francisco office market made bond investors worried, resulting in a wider pricing.

Overall, the U.S office market is extremely volatile as real estate and bond investors continue to struggle with directional indicators.

Another insight from Real Capital Analytics data was pricing for central business district office buildings are declining while suburban office prices are increasing.

March data showed a decline in the U.S. year-over-year of 2.4% for central business district office prices while the suburban counterparts increased 3.6% annually.

Sales in Richmond bucked the trend with a flurry of downtown office building sales in the first quarter and a relative dearth of suburban office trades.

CoStar Group Inc. bought its downtown Richmond global research headquarters building for $130 million, while the Edgeworth Building at 2100 E. Cary St. in Tobacco Row sold in late February for $29.5 million. (And in early April, The Riverside on the James office tower sold for $77 million.)

Those buildings traded at healthy prices, while the only suburban trades during the first quarter were the Bank of America campus in Villa Park in Henrico County that sold for $208 million and a medical office building in GreenGate mixed-use development in the Short Pump area that sold for $18 million.

Fixed-rate commercial mortgage pricing remains low and is in the 3.25% to 4.00% range for most loans. Floating rates are even lower, however, as the Federal Reserve has held the discount rate steady.

The key index to price floating rate loans remains LIBOR, which has hovered below 0.25% for the past year. Spreads are in the 2.25% to 2.75% range for strong sponsors, which puts floating rate pricing in the 2.50% to 3.00% range.

John B. Levy & Co. partner and investment banker Andrew Little can be reached at