Only Chuck Norris can save the Commercial Real Estate Market

Commercial Real Estate Agent with NAI Tampa Bay

Even as some sectors of the US economy see a return to growth, woes in commercial real estate are deepening, raising fears that the fragile recovery could falter.

Unlike the US home market, which has shown signs of rebounding, recovery is elusive in commercial real estate, a sector which includes apartments, offices and industrial and retail properties.

The Moody's commercial property index fell 3.0 percent in October, and remains 32.8 percent down from a year earlier and 40.3 percent lower than two years ago. "Although prices have declined steadily over the past year, the rate of decline has slowed in recent months after falling by about 8.0 percent in both April and May," Moody's said.

According to the Mortgage Bankers Association, loans for commercial and multifamily property activity fell 54 percent in the third quarter from a year ago. Loan originations were off 12 percent from the second quarter.

San Francisco Federal Reserve president Janet Yellen said the prospects for the industry are "worrisome."

chuck norris


"Commercial property didn't turn down until well after housing did," she said. "The sector's problems appear to stem in large part from the effects of the recession and the credit crunch, rather than the type of building boom and lax underwriting standards that tripped up housing."

The market for commercial mortgage-backed securities, Yellen said, "remains deeply distressed and issuance is meager despite support from the Fed."

A survey by the consultancy PricewaterhouseCoopers and the Urban Land Institute suggests the market may continue to slide into 2010. The survey respondents predict that commercial real estate vacancies will continue to increase and rents will decrease across all property sectors before the market hits bottom in 2010.

It projects value declines of 40 percent to 50 percent off 2007 market peaks, setting up the potential for big bargains.


For full article, click here ---->

Comments (4)

Edward & Celia Maddox
The Celtic Connection Realty - Queen Creek, AZ

Thanks for the Article.  We learn a lot of new things on Active Rain Blogs.

Nov 15, 2009 12:58 AM
Jim Crawford
Maximum One Executive REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Great post, and not much hope.  Yes their may be big bargains, but how many banks will fail or have to be propped up by more bailouts?  Instead of bailouts there should be prosecutions!

Nov 15, 2009 02:06 AM
Tim Bradley
Contour Investment Properties - Jackson Hole, WY
Commercial Real Estate Expert in Jackson Hole, WY

Love the title! Don't love the article as much, but it's certainly true.

Nov 22, 2009 10:21 AM
Brad Kitchen
Alterra Real Estate Advisors - Columbus, OH
We're On It

We are starting to see some growth in high tech, logistics, medical and of course governement.  Vacancy growth seems to be slowing and companies are starting to lease space and take advantage of the great deals in the market.

Brad Kitchen, SIOR


Alterra Real Estate Advisors

Jun 02, 2010 12:23 AM