With the exception of San Francisco and Dallas, where lenders reported an increase in commercial real estate leases, other major cities are still experiencing sluggish conditions.
According to the Federal Reserve Board's March 3 Beige Book, commercial real estate conditions remained weak or declined further in most Fed districts, which are Boston, New York, Philadelphia, Cleveland, Richmond, Va., Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco.
Commercial real estate activity weakened in the Richmond, Minneapolis, Kansas City, Dallas, and San Francisco districts, though Dallas noted that leasing fell at a slower rate and San Francisco cited increased leasing in some segments, according to the Fed. Boston and Philadelphia said conditions remained weak, but both noted some improvement in sales of commercial space. New York reported softer activity in the city but some steadying in vacancies and rents elsewhere, while St. Louis said activity remained weak throughout the district.
Several districts also noted that many tenants were pushing for, and in some cases receiving, concessions on rents. All districts reporting on commercial construction said that activity remained weak or slow, except for some moderate boost from federal stimulus projects and other public construction. Credit for commercial development and transactions was still very difficult to obtain in several districts, though San Francisco noted a slight improvement in financing availability.