Credit availability needs to significantly rebound for any hope of a meaningful commercial recovery in 2010, several market tracking tools have indicated.
The National Association of Realtors' commercial leading indicator for brokerage activity, which assesses market behavior in the major commercial real estate markets, rose 0.9% to an index of 102.4 in the third quarter of 2009 from 101.5 in the second quarter. That is 11.1% below a reading of 115.3 in the third quarter of 2008. The index in the second quarter was at the lowest level since the first quarter of 1994.
The office and industrial markets are the sectors most negatively impacted by the economic downturn, said Lawrence Yun, NAR chief economist, adding some initial movements last week in commercial mortgage-backed securities were encouraging.
In its SIOR commercial real estate survey of 710 local market experts, the Society of Industrial and Office Realtors suggested a lower level of business activity in the upcoming quarters. Overall, commercial vacancy rates continue to rise and rents are still declining, according to NAR.
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