Commercial Real Estate Resumes Decline

After the Moody's/REAL Commercial Property Price Index appeared to be bottoming in January, EconomPic stated:

So have we hit a bottom? For the time being... possibly. But longer term, I am not so sure in nominal terms and even less confident in real terms.

Lets put the current price level in perspective. We have come a LONG way (down 44% from peak to current trough), but price levels are now just slightly below the level seen in January 2001 (in real terms). What's different now than then?

• Less demand (3,000,000 less people employed and office vacancy rates at 18% [up from 8%] in 2001)
• Significantly more supply (anyone have a source for square footage?)
• Less credit available for purchases

Fast forward two months later and it turns out that "long term" may not have been all that long term after all.



Noise? Perhaps. That said, fundamentals still don't appear to be strong.

Source: MIT