The NAR reports:

With the exception of cash transactions, investment activity in commercial real estate sectors is nearly at a standstill because commercial lending has essentially halted, while job losses are curtailing the demand for space, according to the latest Commercial Real Estate Outlook of the NATIONAL ASSOCIATION of REALTORS®.

Lawrence Yun, NAR chief economist, said there are serious structural problems in commercial lending. “Although access to residential mortgages has improved, the opposite is true for commercial loans,” he said. “We need liquidity for commercial mortgage-backed securities not only to free the market, but also to rollover existing debt. At the same time, the loss of jobs has had a significant impact on the demand for commercial space.”

Yun added that default rates on commercial real estate loans are very low by historical standards. “However, commercial defaults could deteriorate significantly without a properly structured stimulus that addresses liquidity for commercial mortgages,” he said.

REALTORS® Commercial Alliance Committee chair Steven Good, president and CEO of Sheldon Good & Co. in Chicago, said market conditions are very challenging. “Given that supply and demand for commercial space varies greatly depending on location, it’s important for businesses who want to sell or lease space to consult with a practitioner familiar with local conditions,” he said.
The NAR forecast for four major commercial sectors analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data were provided by Torto Wheaton Research.

Multifamily Market
The apartment rental market—multifamily housing—continued to benefit from weak home sales. Multifamily vacancy rates are forecast at 5.8 percent in the third quarter of 2009, unchanged from the third quarter of this year. Markets with the tightest vacancies include San Diego, northern New Jersey, and Boston, with vacancy rates of 4.2 percent or less. Areas with the highest vacancies include Jacksonville, Fla., Phoenix, and Orlando, Fla., with vacancies of 8.5 percent or higher.

Average rent is projected to grow 2.9 percent in 2008 and 2.8 percent next year. Multifamily net absorption should be 24,400 units in 59 tracked metro areas this year and 142,000 in 2009.

Source: NAR

As noted above the vacancies are up.  This is very evident with the many rent concession signs around the city though prices have improved to levels that even with a higher vacancy a complex can cash flow.

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.