Commercial Real Estate Lending Could Turn Corner

New Orleans, LA, Nov. 8, 2010 -- The commercial real estate market could begin improving soon as there are signs that the freeze in commercial lending should begin to thaw.

“Banks’ profits have returned to healthy levels," and banks should begin lending soon, said National Association of Realtors economist Lawrence Yun at the Economic Issues and Commercial Real Estate Business Trends Forum at the 2010 Realtors Conference & Expo.

“Commercial real estate has experienced a sharp price correction, but there is still a shortage of buyers because of lack of adequate capital resources.”

In addition to capital flow, the commercial market depends heavily on job creation. Yun said that since the beginning of 2010, 1 million jobs have been created, but it's not nearly enough.

“We have turned a corner and while some job creation is good, we are still at close to 10% unemployment,” Yun said. He said the country needs to create much more than 100,000 jobs per month to have a meaningful impact on vacancy rates.

Another challenge affecting the commercial market is corporate profits versus business spending. Yun said that in an ideal market corporate profits and business spending correlate but today business spending is stagnant.

Yun’s 2011 commercial forecast shows steady improvement in the market with rents stabilizing and net absorption slowly improving.