Despite nascent signs of slowing due to the credit crunch, spending on commercial real estate maintained a record pace year to date through July, at $257 billion, a hearty 75% increase over the same period in 2006, according to the National Association of Realtors.

And the organization expects the market will remain relatively healthy for the near future, barring a recession.

A strong economy and job growth over the past few years support the solid commercial market fundamentals being seen, including rising lease and rental rates and low vacancies, and that is what maintained the flow of property transactions at higher levels, said the industry group in its latest Commercial Real Estate Outlook.

NAR senior economist Lawrence Yun said in a statement that “these fundamentals will continue to support commercial real estate markets in 2008.”

In the NAR’s last report on commercial property, in June, it reported that year-to-date spending in the first four months of 2007 was a record $157 billion, up 62% from the prior year.

Scott MacIntosh, the NAR’s senior economist for commercial and investment real estate, said today that although a lot of people may think otherwise, property demand in the commercial markets is expected to remain healthy if the economy holds up. It’s not immune to the credit crunch, but it has not been hurt significantly so far because there is such diversity in the types of property in the commercial sector. In addition, the speculative building that resulted in an over-supply in the residential markets hasn’t been as great.

Although there may be fewer mega-deals of $1 billion plus getting done within the past few months, the NAR data indicates that plenty of smaller deals are continuing to close as borrowers are finding financing from traditional property investors such as banks and institutional investors, he said. But lenders’ underwriting standards are getting tougher, including lower loan-to-value ratios, which will result in the borrower having to put down a larger down payment or put up other collateral.

Mr. MacIntosh said that “a large chunk of what’s being bought now is office properties, and that seems to be because of the job growth, although last month’s [disappointing jobs data] was a bit of a glitch” the job growth for office workers appears to be continuing, which bodes well for continued high demand for office space.

Cindy Chandler, chair of the NAR’s Commercial Alliance, said from that the market may experience a slowdown over the next few months, but that’s more due to credit tightening and cautiousness among market participants suffering from a “herd mentality” stemming from the publicity garnered by the residential mortgage market meltdown than from commercial market fundamentals turning sour.

However, because lenders are more cautious, some deals may get postponed or be slower to complete than in the past few years, she said. “We’re seeing a return to the fundamentals and deal structuring of the mid- (19)90’s and may see some dampening in investment activity, but there is a lot of momentum in commercial real estate.”