Commercial Real Estate To Slow Into Next Year

Washington, DC, Nov. 21, 2008--The economic downturn will slow commercial real estate markets into 2009, according to a forward-looking index for the commercial real estate sectors published by the National Association of Realtors.

Lawrence Yun, NAR chief economist, said all components of the Commercial Leading Indicator for Brokerage Activity were down, with the exception of personal income.

“Aside from weakening conditions in the index variables, the commercial mortgage-backed securities market is all but frozen, making it very difficult to rollover existing debt that is coming due,” he said.

“It is encouraging to hear the Treasury Department is considering using the Troubled Asset Relief Program to help revive the commercial real estate debt market, but time is of the essence, and it must be implemented immediately.”

The CLI slowed 1.7 percent and is 3.1 percent lower than the third quarter of 2007, which was the second highest index on record. NAR’s track of the commercial leading indicator dates back to 1990.

The decline in the index means commercial real estate activity, as measured by net absorption and the completion of new commercial buildings, is projected to weaken over the next six to nine months.