COMMERCIAL property must look like a funny old business to outsiders.

Someone fresh to the market would think you’d buy a building because a) someone in it is going to pay you rent and b) hopefully one day it will be worth more than you paid for it. Like a giant buy-to-let house.

Obviously there’s a little more to it, particularly if you want to get into portfolio diversification and alternative asset strategies and so forth.

But, at its core, you buy for income and hope the value grows over time.

Prior to mid-2007, this got forgotten and astonishing prices were paid despite the occupational market being somewhat lethargic.

A commercial building with no one in it, or someone in it who is paying more than they should be so you know the next tenant is going to pay less, is not good news.

Then came the crash. Prices fell through the floor and you couldn’t give buildings away, let alone sell them. The recession followed and tenants started defaulting, or shrinking, or renegotiating their leases to get better deals. People with empty buildings struggled to let them, or had to agree to whatever terms were demanded to avoid rates. But by summer last year, commercial property looked really cheap – 44% cheaper. There was no point in having money in the bank and bonds weren’t yielding much, so those with money started spending it on commercial property.

But there weren’t enough really good buildings so they started buying slightly less good buildings.

And prices rose. A lot. In fact, UK commercial property has seen average values rise by 13% in the last six months.

Yet we’re only just out of recession and, for those few businesses that are acquisitive, there is enough vacant space on the market to force landlords to offer generous terms. So rents are still falling, as they have every month for the last two years, and it’s hard to see that changing in the near future.

Peculiarly, then, it seems we’re back to market peak behaviour: investors competing to buy property regardless of the fundamentals. Admittedly this time with the common sense to avoid the poorer quality buildings, but still forcefully driving up prices on good stock.

Either the occupational markets need to recover – we need a healthy economy for that to happen – or prices on good property have to stabilise. Without one or the other, will we be heading for another crash?